Atlas Energy LP ( ATLS)

Q3 2011 Earnings Call

November 8, 2011 09:00 AM ET


Brian Begley – Investor Relations

Ed Cohen – CEO

Matt Jones – President Elect, Atlas Resources

Sean McGrath – CFO


Sharon Lui – Wells Fargo

Craig Shere – Tuohy Brothers



Good day ladies and gentlemen and welcome to the Third Quarter 2011 Atlas Energy LP Earnings Conference Call. My name is Chenille [ph] and I will be your operator for today. At this time all participants are in a listen-only mode. Later we will conduct a question-and-answer session. (Operator Instructions). As a reminder this conference is being recorded for replay purposes.

I would now like to turn the conference over to your host for today to Mr. Brian Begley, Head of Investor Relations. Please proceed?

Brian Begley

Good morning everyone and thank you for joining us for today's call. As we get started I’d like to remind everyone that during this conference call we will make certain forward-looking statements and in this context, forward looking statements often address our expected future business and financial performance and financial condition and often contain words such as expects, anticipates and similar words or phrases. Forward looking statements by their nature address matters that are uncertain and are subject to certain risks and uncertainties which could cause actual results to differ materially from those projected in the forward looking statements. We discuss these risks in our quarterly report on Form 10-Q which we expect to be filed later today and our Annual Report also on Form 10-K, particularly in Item 1.

I’d also like to caution you not to place undue reliance on these forward looking statements which reflect management’s analysis only as of the date hereof. The company undertakes no obligations to publicly update our forward looking statements or to publicly release the results of any revisions to forward looking statements and may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

Also in our earnings release we provide a reconciliation from net income to adjusted EBITDA and distributable cash flow as we believe that these non-GAAP measures offer the best means of evaluating the results of our business.

In addition in connection with the planed distribution of common units of our newly formed E&P MLP named Atlas Resource Partners, Atlas Resource Partners filed a registration statement on Form 10 with the SEC in October. The registration statement contains important information about Atlas Resource Partners and the planned distribution including the discussion of risks and uncertainties. When the Form 10 is declared effective by the SEC we advise you to read it carefully.

And lastly Atlas Energy will be presenting at several upcoming industry and Investor Conferences including the DUG East Conference in Pittsburg on November 16th, the Jefferies Global Energy Conference in Houston on December 1st and the Wells Fargo MLP Symposium in New York on December 6.

And with that I will turn the call over to Chief Executive Officer, Ed Cohen for his remarks. Ed?

Ed Cohen

Thanks Brian. Now during the third quarter of 2011 Atlas Energy continued to power forward. Our numbers are excellent, in line with our earlier guidance and compatible with analysts' expectations.

For example distributable cash flow for the quarter at $20.3 million supported a $0.24 per unit quarterly distribution. Income from continuing operations for the third quarter reached $50.9 million compared with a loss of $3.2 million for the corresponding 2010 period.

Sean McGrath, ATLS's Chief Financial Officer will shortly discuss in much greater detail these highly satisfactory markers but for this quarter and up until the present in my opinion the essence of the Atlas story lies in the progress that we’ve been making in expanding Atlas’s E&P operations, getting control of new acreage and key areas, improving drilling results and reaching our goals in our direct placement syndication business and also in our progress toward moving our mid-stream business Atlas Pipeline Partners rapidly forward toward higher per unit distributions.

On the way of course we’ve been working to actuate our Master Limited Partnership, Atlas Resource Partners which is a vehicle of course for acquiring conventional cash flowing properties which, as we discussed in our call three weeks ago have been left relatively undervalued and profusely available because of the industry's fixation on raising money to develop unconventional gas plays.

The spectacular purchases announced by others in the past few weeks have confirmed our thesis of great opportunity for Atlas in this area. The fruits of our continuing efforts in finding and negotiating for conventional properties should become clear in the near future. As for Atlas resources itself once we have obtained SEC clearance for our Form 10, we hope to be off and running within the next 90 days.

In the meantime our E&T and processing operations have both been undergoing fundamental organic transformation. First, at Atlas pipeline all three of our processing divisions continue to operate at or beyond capacity and at very favorable profit margins.

Some $400 million on organic projects are underway in order to alleviate this embarrassment of excess of gas intake including a 60 million cubic foot per day expansion of our Velma facility in Southern Oklahoma.

During the third quarter Velma processed an average 104.9 million cubic feet a day of natural gas, well above its nameplate capacity of 100 million. This excess results from the relatively recent expansion of our Velma gathering systems, and extension which presently brought us into the center of the burgeoning Woodford Shale play before it began to really burgeon.

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