Atlas Energy, L.P. (NYSE: ATLS) (“Atlas Energy” or “ATLS”) today reported operating and financial results for the third quarter 2011.

Third Quarter 2011 Highlights & Results
  • Adjusted earnings before interest, income taxes, depreciation and amortization (“EBITDA”), a non-GAAP measure, of $22.8 million(1)(2);
  • Distributable cash flow, a non-GAAP measure, of $20.3 million, or $0.40 per common unit(1)(2);
  • ATLS declared a cash distribution of $0.24 per limited partner unit based on the financial results for the third quarter 2011, a $0.02 per unit, or 9%, increase from the preceding quarter;
  • On a GAAP basis, consolidated income from continuing operations of $50.9 million for the third quarter 2011 compared with a loss of $3.2 million for the prior year comparable period; and,
  • Total net production of 34.8 million cubic feet equivalents per day (“mmcfed”).
 
(1) A reconciliation of GAAP net income to adjusted EBITDA and distributable cash flow is provided in the financial tables of this release.
(2)

On February 17, 2011, ATLS acquired certain assets and assumed certain liabilities (the “Transferred Business”) from Atlas Energy, Inc., the former owner of ATLS’ general partner. ATLS’ gross margin, adjusted EBITDA and distributable cash flow include the results of operations of the Transferred Business from the date of acquisition. However, in accordance with prevailing accounting principles, all other ATLS financial information, including revenues and net income, are presented combined with those of the Transferred Business for historical periods prior to the date of acquisition, although ATLS did not own the Transferred Business for these periods.

Recent Events

Atlas Energy Announces the Formation of Atlas Resource Partners, L.P.

In October 2011, ATLS announced that it will create a newly formed E&P master limited partnership named Atlas Resource Partners, L.P. (“Atlas Resource Partners”), which will hold substantially all of ATLS’ current natural gas and oil development and production assets and the partnership management business. ATLS intends to take Atlas Resource Partners public by distributing to ATLS unitholders common units representing an approximate 19.6% limited partner interest in Atlas Resource Partners. Atlas Resource Partners intends to apply to list its common units on the New York Stock Exchange.

ATLS management believes that this transaction will substantially enhance unitholder value by separating the company’s current E&P assets and partnership management business from ATLS’ general partner interests and incentive distribution rights in Atlas Pipeline Partners, L.P. (NYSE: APL). The distribution of limited partner interests in Atlas Resource Partners will also create a separate currency denominated in units of Atlas Resource Partners, which will enable Atlas Resource Partners to expand cash flows from its natural gas and oil production assets through strategic acquisitions and organic development, without diluting ATLS’ ownership in its other assets, including its interest in APL.

ATLS will distribute common units representing an approximately 19.6% limited partner interest in Atlas Resource Partners to ATLS unitholders as of a record date to be determined. The precise number of common units of Atlas Resource Partners to be distributed will be determined at a later date. ATLS expects the transaction to be completed during the first quarter of 2012.

Immediately following the transaction, ATLS will hold common units representing an approximate 78.4% limited partner interest in Atlas Resource Partners. ATLS will also own the general partner of Atlas Resource Partners, which will own a 2% general partner interest and all of the incentive distribution rights in Atlas Resource Partners. The incentive distribution rights and general partner interests will provide its holder with an increasing percentage of the distributions of Atlas Resource Partners if target distributions are achieved, up to a 50% share of distributions. ATLS will also continue to own the general partner interest and incentive distribution rights of Atlas Pipeline Partners, ATLS’ midstream subsidiary. In addition, ATLS will continue to own an 18% general partner interest in Lightfoot Capital Partners, LP, an entity established to incubate new MLPs and invest in existing MLPs.

GE Energy Financial Services Invests in Lightfoot Capital; Lightfoot Acquires Interest in LNG Facility

In October 2011, ATLS announced that GE Energy Financial Services, a unit of GE (NYSE: GE), has joined Lightfoot Capital Partners (“Lightfoot”). GE Energy Financial Services will own a general partner interest and a 58% limited partner interest and will participate in future growth at Lightfoot and the terminals business. Following this investment, ATLS will hold an approximate 16% general partner interest and 12% limited partner interest in Lightfoot. Lightfoot is the general partner and majority owner of Arc Terminals LP, a leading independent operator of petroleum and refined product terminals in eight states. In conjunction with this transaction, Lightfoot will make a direct investment and own a 48% interest in Arc LNG Holdings LLC, which will own a 20% interest in Gulf LNG Energy’s terminal in Pascagoula, Mississippi. This newly constructed liquefied natural gas (“LNG”) facility will have 1.3 billion cubic feet per day of capacity, which is contracted under 20-year firm service agreements for all of its capacity.

E&P Operations

  • Average net daily production for the third quarter 2011 for the Appalachia segment was 31.3 mmcfed.
  • ATLS expects to connect 16 Marcellus horizontal wells, drilled through the partnership management business, during the first quarter 2012. Eleven of these wells were drilled in 2011, and five of these Marcellus wells have been previously drilled and completed and are awaiting pipeline connection.
  • Average net daily production for the New Albany/Antrim segment for the third quarter 2011 was 3.1 mmcfed.
  • Average net daily production for the third quarter 2011 for the Niobrara segment was 461 thousand cubic feet equivalents per day (“mcfed”).

Partnership Management Segment
  • Partnership management margin(2) contributed $10.4 million to distributable cash flow for the third quarter 2011 compared with $6.2 million for the second quarter 2011. The increase compared with the sequential quarter was primarily due to the increase in funds raised and capital deployed for the direct investment programs.
 
(2) Partnership management margin is comprised of Well Construction and Completion margin, Well Services margin and Administration and Oversight Fee revenues.

Atlas Pipeline Partners, L.P.
  • On October 26, 2011, APL declared a cash distribution of $0.54 per unit on its outstanding common limited partner units, representing the cash distribution for the quarter ended September 30, 2011, a $0.07 per unit, or 14.9%, increase from the preceding quarter. ATLS will receive $4.9 million of cash distributions from APL on November 14, 2011, the date of payment for the APL third quarter 2011 distribution.
  • During the third quarter 2011, APL operated at or above nameplate capacity on all of its gathering and processing systems in the Mid Continent. APL processed approximately 567 mmcfd of natural gas, a 21% increase over the prior year comparable quarter’s volumes, amongst its WestOK, WestTX and Velma systems in the third quarter 2011. Record volumes of approximately 53,000 bbl per day of gross natural gas liquids were generated from APL’s three processing systems.
  • At September 30, 2011, ATLS owned a 2.0% general partner interest, all of the incentive distribution rights, and an 10.7% 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 combined statements of operations and as a component of partners’ capital on its consolidated combined balance sheets. A consolidating combined 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 Atlas Pipeline third quarter 2011 earnings release for additional details on its financial results.

Corporate and Other

  • Cash general and administrative expense, excluding amounts attributable to APL, was $5.1 million for the third quarter 2011. The current period is presented net of $5.6 million of fees received, net of $0.6 million of associated costs, from ATLS’ Transition Service Agreement with Chevron Corp. (NYSE: CVX), through which ATLS provides accounting and other services. ATLS will recognize these fees over the period the services are provided, which generally extends through the fourth quarter of 2011. Please refer to the consolidating combined statements of operations provided in the financial tables of this release.
  • Cash interest expense, excluding amounts attributable to APL, was $0.2 million for the third quarter 2011. As of September 30, 2011, ATLS had no amounts outstanding under its revolving credit facility, which has a current borrowing base of $160 million, and had a cash position of $72.2 million.

Hedging Summary
  • ATLS entered into derivative contracts during the third quarter 2011 for its natural gas and oil production. ATLS currently has approximately 24.6 billion cubic feet equivalents of its future production hedged through 2015. A summary of the ATLS’ current derivative positions as of November 1, 2011 is as follows:

Natural Gas
     
Fixed Price Swaps
Average
Production Period Fixed Price Volumes
Ended December 31, (per mcf)(a)(b) (per mcf)(a) % Hedged(d)

2011

(c)
$ 4.85 1,485,714 53%
2012 $ 5.40 5,257,143

47%
2013 $ 5.70 2,971,429

27%
2014 $ 6.02 2,742,857

25%
2015 $ 6.30 2,742,857

25%
       
Costless Collars
Average Average
Production Period Floor Price Ceiling Price Volumes
Ended December 31, (per mcf)(a)(b) (per mcf)(a)(b) (per mcf)(a) % Hedged(d)

2011

(c)

$ 4.28

$ 6.01
771,429 27%
2012

$ 4.61

$ 6.54
1,828,571 16%
2013

$ 5.13

$ 6.52
2,971,429 27%
2014

$ 5.08

$ 6.37
1,371,429 12%
2015

$ 5.29

$ 6.69
1,371,429 12%
 

Crude Oil
       
Costless Collars
Average Average
Production Period Floor Price Ceiling Price Volumes
Ended December 31, (per bbl)(a) (per bbl)(a) (bbls)(a) % Hedged(d)

2011

(c)

$ 90.00

$ 125.31
15,000 55%
2012

$ 90.00

$ 117.91
60,000 56%
2013

$ 90.00

$ 116.40
60,000 56%
2014

$ 80.00

$ 121.25
24,000 22%
2015

$ 80.00

$ 120.75
24,000 22%

_______________________________________________________________
(a)   “Mcf” represents thousand cubic feet; “bbl” represents barrel.
(b) Includes an estimated positive basis differential and Btu (British thermal units) adjustment.
(c) Reflects hedges covering the last three months of 2011.
(d) Hedge percentages based on Q3 2011 average production rates.
 

Interested parties are invited to access the live webcast of an investor call with management regarding Atlas Energy, L.P.’s third quarter 2011 results on Tuesday, November 8, 2011 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 12:00 p.m. ET on November 8, 2011 by dialing 888-286-8010, passcode: 22529130.

Atlas Energy, L.P. is a master limited partnership which owns an interest in over 8,500 producing natural gas and oil wells, representing approximately 187 Bcfe of net proved reserves. Additionally, Atlas Energy owns and operates the general partner of Atlas Pipeline Partners, L.P. (NYSE: APL), through which it owns a 2% general partner interest, all of the incentive distribution rights and approximately 5.75 million common limited partner units of APL. For more information, please visit our website at www.atlasenergy.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 the Mid-Continent region of Oklahoma, southern Kansas, and northern and western Texas, APL owns and operates five active gas processing plants as well as approximately 8,600 miles of active intrastate gas gathering pipeline. For more information, visit APL’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’ reports filed with the U.S. Securities and Exchange Commission, including quarterly reports on Form 10-Q, 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 share data)
 
Three Months Ended Nine Months Ended
September 30, September 30,
Revenues: 2011  

2010(1)

2011(1)
 

2010(1)
Gas and oil production $ 16,305 $ 20,106 $ 51,654 $ 70,816
Well construction and completion 35,657 60,748 64,336 176,685
Gathering and processing 357,620 232,774 983,572 683,336
Administration and oversight 2,337 3,561 5,073 7,473
Well services 4,910 5,497 15,051 15,589
Gain (loss) on mark-to-market derivatives(2) 23,760 (6,801 ) 8,952 3,738
Other, net   890     4,130     26,657     10,631  
Total revenues   441,479     320,015     1,155,295     968,268  
 
Costs and expenses:
Gas and oil production 3,990 6,257 11,953 16,863
Well construction and completion 30,449 51,481 54,754 149,724
Gathering and processing 301,625 196,218 832,080 575,207
Well services 2,043 2,416 6,077 7,691
General and administrative(1) 18,617 8,037 57,046 25,350
Depreciation, depletion and amortization   27,541     30,364     81,518     87,576  
Total costs and expenses   384,265     294,773     1,043,428     862,411  
 
Operating income 57,214 25,242 111,867 105,857
 
Gain (loss) on asset sales 8 255,722 (2,947 )
Interest expense(1) (6,315 ) (24,089 ) (30,960 ) (76,229 )
Loss on early extinguishment of debt       (4,359 )   (19,574 )   (4,359 )
 
Income (loss) from continuing operations 50,907 (3,206 ) 317,055 22,322
 
Income (loss) from discontinued operations       305,927     (81 )   320,684  
Net income 50,907 302,721 316,974 343,006
 
Income attributable to non-controlling interests   (43,794 )   (252,564 )   (263,097 )   (255,059 )
Net income after non-controlling interests 7,113 50,157 53,877 87,947

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)

 

 

 

 

 

(15,711

)

 

 

(4,711

)

 

 

(56,005

)
Net income attributable to common limited partners $ 7,113   $ 34,446   $ 49,166   $ 31,942  
 
Net income attributable to common limited partners per unit – basic:
Income (loss) from continuing operations attributable to common limited partners $ 0.13 $ (0.13 ) $ 1.02 $ (0.29 )
Income from discontinued operations attributable to common limited partners       1.37         1.44  
Net income attributable to common limited partners $ 0.13   $ 1.24   $ 1.02   $ 1.15  
 
Net income attributable to common limited partners per unit – diluted:
Income (loss) from continuing operations attributable to common limited partners $ 0.13 $ (0.13 ) $ 0.99 $ (0.29 )
Income from discontinued operations attributable to common limited partners       1.37         1.44  
Net income attributable to common limited partners $ 0.13   $ 1.24   $ 0.99   $ 1.15  
 
Weighted average common limited partner units outstanding:
Basic   51,257     27,704     47,212     27,704  
Diluted   53,100     27,704     48,507     27,704  
 
Net income attributable to common limited partners:
Income (loss) from continuing operations $ 7,113 $ (3,552 ) $ 49,176 $ (7,918 )
Income (loss) from discontinued operations       37,998     (10 )   39,860  
Net income attributable to common limited partners $ 7,113   $ 34,446   $ 49,166   $ 31,942  
 

(1)

In accordance with prevailing accounting literature, the Partnership 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 the Partnership, 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 the Partnership 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 the Partnership’s consolidated subsidiary, APL. The underlying hydrocarbon derivatives do not represent present or potential future obligations of the Partnership.
   

ATLAS ENERGY, L.P.
CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited; in thousands)
 

September 30,

December 31,

ASSETS

2011

2010(1)

Current assets:
Cash and cash equivalents $ 72,384 $ 247
Accounts receivable 143,836 120,697
Current portion of derivative asset 17,998 36,621
Prepaid expenses and other   31,755   23,652  
Total current assets 265,973 181,217
 

Property, plant and equipment, net
2,008,075 1,849,486

Intangible assets, net
110,704 128,543

Investment in joint venture
86,688 153,358

Goodwill, net
31,784 31,784

Long-term derivative asset
34,299 36,125

Other assets, net
  44,679   54,749  
$ 2,582,202 $ 2,435,262  
 

LIABILITIES AND PARTNERS’ CAPITAL
 

Current liabilities:
Current portion of long-term debt $ 2,054 $ 35,625
Accounts payable 85,684 75,339
Liabilities associated with drilling contracts 33,194 65,072
Accrued producer liabilities 89,658 72,996
Current portion of derivative liability 4,917
Current portion of derivative payable to Drilling Partnerships 23,664 30,797
Accrued interest 5,896 1,921
Accrued well drilling and completion costs 17,433 30,126
Advances from affiliates 14,335
Accrued liabilities   60,954   42,654  
Total current liabilities 318,537 373,782
 

Long-term debt, less current portion
423,927 565,764

Long-term derivative liability
11,901

Long-term derivative payable to Drilling Partnerships
19,808 34,796

Other long-term liabilities
44,070 42,896
 

Commitments and contingencies
 

Partners’ Capital:
Common limited partners’ interests 573,839 413,054
Accumulated other comprehensive income   12,693   3,882  
586,532 416,936
Non-controlling interests   1,189,328   989,187  
Total partners’ capital   1,775,860   1,406,123  
$ 2,582,202 $ 2,435,262  
 

(1)
In accordance with prevailing accounting literature, the Partnership 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.
   
ATLAS ENERGY, L.P.
Financial and Operating Highlights

 
Three Months Ended Nine Months Ended
September 30, September 30,
2011  

2010(1)

2011(1)
 

2010(1)
 
Net income attributable to common limited partners per

unit - basic
$ 0.13 $ 1.24 $ 1.02 $ 1.15
 
Distributable cash flow per unit(2)(3) $ 0.40 $ $ 1.00 $
 
Cash distributions paid per unit(2)(4) $ 0.24 $ $ 0.57 $
 
Production revenues (in thousands):
Natural gas $ 12,189 $ 15,864 $ 38,383 $ 57,801
Oil(5)   4,116   4,242   13,271   13,015
Total production revenues(5) $ 16,305 $ 20,106 $ 51,654 $ 70,816
 
Production volume:(6)(7)

Appalachia(8):
Natural gas (Mcfd) 27,088 33,119 28,166 34,995
Oil (Bpd)(9)   703   948   745   884

Total (Mcfed)
  31,304   38,809   32,637   40,299

New Albany/Antrim:
Natural gas (Mcfd) 3,081 2,193 3,172 1,614
Oil (Bpd)        
Total (Mcfed)   3,081   2,193   3,172   1,614

Niobrara:
Natural gas (Mcfd) 461 349
Oil (Bpd)        
Total (Mcfed)   461     349  

Total:
Natural gas (Mcfd) 30,629 35,312 31,687 36,610
Oil (Bpd)(9)   703   948   745   884
Total (Mcfed)   34,845   41,002   36,158   41,914
 
Average sales prices:(7)
Natural gas (per Mcf) (10) $ 5.10 $ 6.59 $ 5.24 $ 7.15
Oil (per Bbl)(11) $ 83.34 $ 74.71 $ 90.65 $ 75.66
 
Production costs:(7)(12)
Lease operating expenses per Mcfe $ 1.12 $ 1.55 $ 1.01 $ 1.27
Production taxes per Mcfe   0.06   0.03   0.05   0.03
Total production costs per Mcfe $ 1.18 $ 1.58 $ 1.06 $ 1.30
 
Depletion per Mcfe(7) $ 2.15 $ 2.97 $ 2.09 $ 2.45
 

(1)
In accordance with prevailing accounting literature, the Partnership 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.
 

(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 51,257,000 weighted average common limited partner units outstanding for the 3rd quarter 2011 and 51,242,000, which 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 paid per limited partner unit by the Partnership within 50 days after the end of each quarter, based upon the distributable cash flow generated during the respective quarter.
 
(5) Includes NGL production revenue.
 
(6)

Production quantities consist of the sum of (i) the Partnership’s proportionate share of production from wells in which it has a direct interest, based on the Partnership’s proportionate net revenue interest in such wells, and (ii) the Partnership’s proportionate share of production from wells owned by the investment partnerships in which the Partnership 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.
 
(7) “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.
 
(8) Appalachia consists of the Partnership’s production located in Pennsylvania, Ohio, New York, West Virginia and Tennessee.
 
(9) Includes NGL production volume.
 
(10)

The Partnership’s average sales price for natural gas before the effects of financial hedging was $4.90 per Mcf and $4.12 per Mcf for the three months ended September 30, 2011 and 2010, respectively, and $4.69 per Mcf and $4.74 per Mcf for the nine months ended September 30, 2011 and 2010, respectively. These amounts exclude the impact of certain allocations of production revenues to investor partners within the investor partnerships. Including the effects of these allocations, average natural gas sales prices were $4.33 per Mcf ($4.13 per Mcf before the effects of financial hedging) and $4.88 per Mcf ($2.41 per Mcf before the effects of financial hedging) for the three months ended September 30, 2011 and 2010, respectively, and $4.44 per Mcf ($3.89 per Mcf before the effects of financial hedging) and $5.78 per Mcf ($3.47 per Mcf before the effects of financial hedging) for the nine months ended September 30, 2011 and 2010, respectively.
 
(11) The Partnership’s average sales price for oil before the effects of financial hedging was $81.85 per barrel and $66.36 per barrel for the three months ended September 30, 2011 and 2010, respectively, and $89.79 per barrel and $69.07 per barrel for the nine months ended September 30, 2011 and 2010, respectively.
 

(12)

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 the Partnership’s proportionate share of lease operating expenses associated with certain allocations of production revenue to investor partners within the Partnership’s investor partnerships. Including the effects of these costs, lease operating expenses per Mcfe were $0.73 per Mcfe ($0.79 per Mcfe for total production costs) and $1.05 per Mcfe ($1.08 per Mcfe for total production costs) for the three months ended September 30, 2011 and 2010, respectively, and $0.67 per Mcfe ($0.72 per Mcfe for total production costs) and $0.86 per Mcfe ($0.89 per Mcfe for total production costs) for the nine months ended September 30, 2011 and 2010, respectively.
   
ATLAS ENERGY, L.P.
CAPITALIZATION INFORMATION

(unaudited; in thousands)
 
September 30, 2011 December 31, 2010(1)
Atlas   Atlas   Atlas   Atlas   Consolidated
Energy Pipeline Consolidated Energy Pipeline Combined
Total debt $ $ 425,981 $ 425,981 $ 35,415 $ 565,974 $ 601,389
Less: Cash   (72,217 )   (167 )   (72,384 )   (83 )   (164 )   (247 )
Total net debt/(cash) (72,217 ) 425,814 353,597 35,332 565,810 601,142
 
Partners’ capital   587,299     1,270,318    

1,775,860(2)

 
  418,369     1,041,647    

1,406,123(2)

 
 
Total capitalization $ 515,082   $ 1,696,132   $ 2,129,457   $ 453,701   $ 1,607,457   $ 2,007,265  
 
Ratio of net debt to

capitalization

0.00x

 

0.08x

 

______________________________

(1)
  In accordance with prevailing accounting literature, the Partnership 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.

(2)
Net of eliminated amounts.
   
ATLAS ENERGY, L.P.
CAPITAL EXPENDITURE DATA

(unaudited; in thousands)
 
Three Months Ended Nine Months Ended
September 30, September 30,
2011  

2010(1)
2011  

2010(1)

Atlas Energy
Maintenance capital expenditures(2) $ 2,300 $ $ 7,533 $
Expansion capital expenditures   19,588   28,460   28,737   70,716
Total $ 21,888 $ 28,460 $ 36,270 $ 70,716
 

Atlas Pipeline
Maintenance capital expenditures $ 4,980 $ 2,595 $ 13,451 $ 6,478
Expansion capital expenditures   51,195   8,764   134,693   24,716
Total $ 56,175 $ 11,359 $ 148,144 $ 31,194
 

Consolidated Combined
Maintenance capital expenditures $ 7,280 $ 2,595 $ 20,984 $ 6,478
Expansion capital expenditures   70,783   37,224   163,430   95,432
Total $ 78,063 $ 39,819 $ 184,414 $ 101,910

______________________________

(1)
  In accordance with prevailing accounting literature, the Partnership 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.

(2)
Prior to the Partnership’s acquisition of the Transferred Business on February 17, 2011, the Partnership had no maintenance capital requirements with regard to its oil and gas properties.
   
ATLAS ENERGY, L.P.
Financial Information

(unaudited; in thousands)
 
Three Months Ended Nine Months Ended
September 30, September 30,
Atlas Energy Stand-Alone Adjusted EBITDA and   2011       2010     2011       2010  
Distributable Cash Flow Summary:
Gas and oil production margin $ 12,315 $ $ 31,128 $
Well construction and completion margin 5,208 7,074
Administration and oversight margin 2,337 4,061
Well services margin 2,867 7,437
Gathering   (449 )       (1,670 )    
Gross Margin 22,278 48,030
Cash general and administrative expenses(1) (5,068 ) (86 ) (15,153 ) (747 )
Atlas Pipeline cash distributions(2) 4,946 11,363
Other, net   627         14,985      
Adjusted EBITDA(3) 22,783 (86 ) 59,225 (747 )
Cash interest expense(4) (208 ) (1,002 ) (524 ) (2,144 )
Maintenance capital expenditures(5)   (2,300 )       (7,533 )    
Distributable Cash Flow(3) $ 20,275   $ (1,088 ) $ 51,168   $ (2,891 )
 
Distributions Paid(6) $ 12,303 $ $ 29,214 $
per limited partner unit $ 0.24 $ $ 0.57 $
 
 
Reconciliation of non-GAAP measures to net income (loss) attributable to common limited partners(3):
Atlas Energy stand-alone distributable cash flow $ 20,275 $ (1,088 ) $ 51,168 $ (2,891 )
Distributable cash flow of Transferred Business as of and prior to February 17, 2011 (the date of acquisition)(7)

27,875

8,261

91,661

Atlas Pipeline net income attributable to common limited partners

6,465

35,906

37,555

35,940
Atlas Pipeline cash distributions(2) (4,946 ) (11,363 )
Non-recurring acquisition costs (2,087 )
Depreciation, depletion and amortization (8,071 ) (11,798 ) (24,019 ) (31,929 )
Amortization of deferred finance costs (171 ) (5,356 )
Non-cash stock compensation expense (4,319 ) (373 ) (8,931 ) (1,082 )
Maintenance capital expenditures(5) 2,300 7,533
Non-cash net gain (loss) on asset sales 48 (2,947 )
Other non-cash adjustments (4,420 ) (365 ) 1,068 (805 )

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)(7)

 

   

(15,711

)

 
 

(4,711

)
 

(56,005

)

Net income attributable to common limited partners

$

7,113
 

$

34,446
 

$

49,166
 

$

31,942
 

______________________________
(1)   Excludes non-cash stock-compensation expense and non-recurring costs incurred in connection with the acquisition of the Transferred Business.
(2) Represents the cash distribution earned from Atlas Pipeline during the respective quarterly period (and paid from to the Partnership within 45 days after the completion of the respective quarterly period).
(3) 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 the Partnership believes that adjusted EBITDA and distributable cash flow provide additional information for evaluating the Partnership’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 the Partnership’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.
(4) Excludes non-cash amortization of deferred financing costs.
(5) Prior to the Partnership’s acquisition of the Transferred Business on February 17, 2011, the Partnership had no maintenance capital requirements with regard to its oil and gas properties.
(6) Represents the cash distributions paid by the Partnership within 50 days after the end of each quarter, based upon the distributable cash flow generated during the respective quarter.
(7) In accordance with prevailing accounting literature, the Partnership 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.
       
ATLAS ENERGY, L.P.
CONSOLIDATING COMBINED STATEMENTS OF OPERATIONS

(unaudited; in thousands)
 

Three Months Ended September 30, 2011

 
 
Atlas Atlas Consolidated
Energy Pipeline Eliminations Combined
Revenues:
Gas and oil production $ 16,305 $ $ $ 16,305
Well construction and completion 35,657 35,657
Gathering and processing 4,431 353,189 357,620
Administration and oversight 2,337 2,337
Well services 4,910 4,910
Gain on mark-to-market derivatives 23,760 23,760
Other, net   (3,793 )   4,683         890  
Total revenues   59,847     381,632         441,479  
 
Costs and expenses:
Gas and oil production 3,990 3,990
Well construction and completion 30,449 30,449
Gathering and processing 4,880 296,745 301,625
Well services 2,043 2,043
General and administrative 9,387 9,230 18,617
Depreciation, depletion and amortization   8,071     19,470         27,541  
Total costs and expenses   58,820     325,445         384,265  
 
Operating income 1,027 56,187 57,214
 
Gain on asset sales 8 8
Interest expense (379 ) (5,936 ) (6,315 )
Loss on early extinguishment of debt                
 
Income from continuing operations 648 50,259 50,907
Discontinued operations                
Net income 648 50,259 50,907
Income attributable to non-controlling interests       (1,760 )   (42,034 )   (43,794 )
Net income attributable to common limited partners $ 648   $ 48,499   $ (42,034 ) $ 7,113  
       
ATLAS ENERGY, L.P.
CONSOLIDATING COMBINED STATEMENTS OF OPERATIONS

(unaudited; in thousands)
 

Three Months Ended September 30, 2010
 
Atlas Atlas Consolidated
Energy(1) Pipeline Eliminations Combined(1)
Revenues:
Gas and oil production $ 20,106 $ $ $ 20,106
Well construction and completion 60,748 60,748
Gathering and processing 2,345 230,429 232,774
Administration and oversight 3,561 3,561
Well services 5,497 5,497
Loss on mark-to-market derivatives (6,801 ) (6,801 )
Other, net   (147 )   4,277         4,130  
Total revenues   92,110     227,905         320,015  
 
Costs and expenses:
Gas and oil production 6,257 6,257
Well construction and completion 51,481 51,481
Gathering and processing 4,446 191,772 196,218
Well services 2,416 2,416
General and administrative 459

(1)
7,578 8,037
Depreciation, depletion and amortization   11,798     18,566         30,364  
Total costs and expenses   76,857     217,916         294,773  
 
Operating income 15,253 9,989 25,242
 
Gain (loss) on asset sales
Interest expense (1,002 )

(1)
(23,087 ) (24,089 )
Loss on early extinguishment of debt       (4,359 )       (4,359 )
 
Income (loss) from continuing operations 14,251 (17,457 ) (3,206 )
Discontinued operations       305,927         305,927  
Net income 14,251 288,470 302,721
Income attributable to non-controlling interests       (1,316 )   (251,248 )   (252,564 )
Net income after non-controlling interests 14,251 287,154 (251,248 ) 50,157

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))

 

(15,711

)
 

   

   

(15,711

)
Net income (loss) attributable to common limited partners

$

(1,460

)

$

287,154
 

$

(251,248

)

$

34,446
 
 

(1)
In accordance with prevailing accounting literature, the Partnership 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 the Partnership, 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 the Partnership was unable to identify and allocate such amounts to the Transferred Business for the respective periods.
       
ATLAS ENERGY, L.P.
CONSOLIDATING COMBINED STATEMENTS OF OPERATIONS

(unaudited; in thousands)
 

Nine Months Ended September 30, 2011
 
Atlas Atlas Consolidated
Energy(1) Pipeline Eliminations Combined(1)
Revenues:
Gas and oil production $ 51,654 $ $ $ 51,654
Well construction and completion 64,336 64,336
Gathering and processing 14,048 969,524 983,572
Administration and oversight 5,073 5,073
Well services 15,051 15,051
Gain on mark-to-market derivatives 8,952 8,952
Other, net   15,956     10,701         26,657  
Total revenues   166,118     989,177         1,155,295  
 
Costs and expenses:
Gas and oil production 11,953 11,953
Well construction and completion 54,754 54,754
Gathering and processing 16,377 815,703 832,080
Well services 6,077 6,077
General and administrative 30,229

(1)
26,817 57,046
Depreciation, depletion and amortization   24,019     57,499         81,518  
Total costs and expenses   143,409     900,019         1,043,428  
 
Operating income 22,709 89,158 111,867
 
Gain on asset sales 48 255,674 255,722
Interest expense (6,435 )

(1)
(24,525 ) (30,960 )
Loss on early extinguishment of debt       (19,574 )       (19,574 )
 
Income from continuing operations 16,322 300,733 317,055
Discontinued operations       (81 )       (81 )
Net income 16,322 300,652 316,974
Income attributable to non-controlling interests       (4,492 )   (258,605 )   (263,097 )
Net income after non-controlling interests 16,322 296,160 (258,605 ) 53,877

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 attributable to common limited partners $ 11,611   $ 296,160   $ (258,605 ) $ 49,166  
 

(1)
In accordance with prevailing accounting literature, the Partnership 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 the Partnership, 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 the Partnership was unable to identify and allocate such amounts to the Transferred Business for the respective periods.
     
ATLAS ENERGY, L.P.
CONSOLIDATING COMBINED STATEMENTS OF OPERATIONS

(unaudited; in thousands)
 

Nine Months Ended September 30, 2010
 
Atlas Atlas Consolidated
Energy(1) Pipeline Eliminations Combined(1)
Revenues:
Gas and oil production $ 70,816 $ $ $ 70,816
Well construction and completion 176,685 176,685
Gathering and processing 11,414 671,922 683,336
Administration and oversight 7,473 7,473
Well services 15,589 15,589
Gain on mark-to-market derivatives 3,738 3,738
Other, net   (344 )   10,975         10,631  
Total revenues   281,633     686,635         968,268  
 
Costs and expenses:
Gas and oil production 16,863 16,863
Well construction and completion 149,724 149,724
Gathering and processing 16,499 558,708 575,207
Well services 7,691 7,691
General and administrative 1,829

(1)
23,521 25,350
Depreciation, depletion and amortization   31,929     55,647         87,576  
Total costs and expenses   224,535     637,876         862,411  
 
Operating income 57,098 48,759 105,857
 
Loss on asset sales (2,947 ) (2,947 )
Interest expense (2,144 )

(1)
(74,085 ) (76,229 )
Loss on early extinguishment of debt       (4,359 )       (4,359 )
 
Income (loss) from continuing operations 52,007 (29,685 ) 22,322
Discontinued operations       320,684         320,684  
Net income 52,007 290,999 343,006
Income attributable to non-controlling interests       (3,578 )   (251,481 )   (255,059 )
Net income after non-controlling interests 52,007 287,421 (251,481 ) 87,947

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))
 

 

 

(56,005

 

 

)
 

 

 

   

 

 

   

 

 

(56,005

 

 

)
Net income (loss) attributable to common limited partners

$

(3,998

)

$

287,421
 

$

(251,481

)

$

31,942
 
 

(1)
In accordance with prevailing accounting literature, the Partnership 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 the Partnership, 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 the Partnership 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)
 

September 30, 2011
 
Atlas Atlas
ASSETS Energy Pipeline Eliminations Consolidated
Current assets:
Cash and cash equivalents $ 72,217 $ 167 $ $ 72,384
Accounts receivable 28,534 115,302 143,836
Current portion of derivative asset 6,111 11,887 17,998
Prepaid expenses and other   7,446   24,309         31,755
Total current assets 114,308 151,665 265,973
 
Property, plant and equipment, net 526,634 1,481,441 2,008,075
Goodwill and intangible assets, net 33,436 109,052 142,488
Long-term derivative asset 7,349 26,950 34,299
Investment in joint venture 86,688 86,688
Investment in subsidiaries 81,757 (81,757 )
Other assets, net   22,838   21,841         44,679
$ 786,322 $ 1,877,637   $ (81,757 ) $ 2,582,202
 
LIABILITIES AND PARTNERS’ CAPITAL
 
Current liabilities:
Current portion of long-term debt $ $ 2,054 $ $ 2,054
Accounts payable 40,405 45,279 85,684
Liabilities associated with drilling contracts 33,194 33,194
Accrued producer liabilities 89,658 89,658
Current portion of derivative liability
Current portion of derivative payable to

Partnerships

23,664

23,664
Accrued interest 5,896 5,896
Accrued well drilling and completion costs 17,433 17,433
Advances from affiliates
Accrued liabilities   20,576   40,378         60,954
Total current liabilities 135,272 183,265 318,537
 
Long-term debt, less current portion 423,927 423,927
Long-term derivative liability
Long-term derivative payable to Partnerships 19,808 19,808
Other long-term liabilities 43,943 127 44,070
 
Partners’ Capital:
Common limited partners’ interests 573,839 1,306,289 (1,306,289 ) 573,839
Accumulated other comprehensive income (loss)   13,460   (6,106 )   5,339     12,693
587,299 1,300,183 (1,300,950 ) 586,532
Non-controlling interests     (29,865 )   1,219,193     1,189,328
Total partners’ capital   587,299   1,270,318     (81,757 )   1,775,860
$ 786,322 $ 1,877,637   $ (81,757 ) $ 2,582,202
       
ATLAS ENERGY, L.P.
CONDENSED CONSOLIDATING COMBINED BALANCE SHEETS

(unaudited; in thousands)
 

December 31, 2010
 
Atlas Atlas Consolidated
ASSETS Energy(1) Pipeline Eliminations Combined(1)
Current assets:
Cash and cash equivalents $ 83 $ 164 $ $ 247
Accounts receivable 20,938 99,759 120,697
Current portion of derivative asset 36,621 36,621
Prepaid expenses and other   8,534   15,118         23,652
Total current assets 66,176 115,041 181,217
 
Property, plant and equipment, net 508,484 1,341,002 1,849,486
Goodwill and intangible assets, net 33,948 126,379 160,327
Long-term derivative asset 36,125 36,125
Investment in joint venture 153,358 153,358
Investment in subsidiaries 53,893 (53,893 )
Other assets, net   25,681   29,068         54,749
$ 724,307 $ 1,764,848   $ (53,893 ) $ 2,435,262
 
LIABILITIES AND PARTNERS’ CAPITAL
 
Current liabilities:
Current portion of long-term debt $ 35,415 $ 210 $ $ 35,625
Accounts payable 45,957 29,382 75,339
Liabilities associated with drilling contracts 65,072 65,072
Accrued producer liabilities 72,996 72,996
Current portion of derivative liability 353 4,564 4,917
Current portion of derivative payable to

Partnerships

30,797

30,797
Accrued interest 1,921 1,921
Accrued well drilling and completion costs 30,126 30,126
Advances from affiliates 2,055 12,280 14,335
Accrued liabilities   12,401   30,253         42,654
Total current liabilities 222,176 151,606 373,782
 
Long-term debt, less current portion 565,764 565,764
Long-term derivative liability 6,293 5,608 11,901
Long-term derivative payable to Partnerships 34,796 34,796
Other long-term liabilities 42,673 223 42,896
 
Partners’ Capital:
Common limited partners’ interests 413,054 1,085,408 (1,085,408 ) 413,054
Accumulated other comprehensive income (loss)   5,315   (11,224 )   9,791     3,882
418,369 1,074,184 (1,075,617 ) 416,936
Non-controlling interests     (32,537 )   1,021,724     989,187
Total partners’ capital   418,369   1,041,647     (53,893 )   1,406,123
$ 724,307 $ 1,764,848   $ (53,893 ) $ 2,435,262
 
(1) In accordance with prevailing accounting literature, the Partnership 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.
   
ATLAS ENERGY, L.P.
Ownership Interests Summary
 
Overall
Ownership
Interest

Atlas Energy Ownership Interests as of September 30, 2011:
Amount Percentage
 
ATLAS PIPELINE:
General partner interest 100% 2.0 %
Common units 5,754,253 10.7 %
Incentive distribution rights 100% N/A  
Total Atlas Energy ownership interests in Atlas Pipeline 12.7 %
 
LIGHTFOOT CAPITAL PARTNERS, GP LLC:
Approximate general partner ownership interest 16.0 %
Approximate limited partner ownership interest 12.0 %

Copyright Business Wire 2010