Atlas Energy, L.P. Reports Operating And Financial Results For The First Quarter 2012

Atlas Energy, L.P. (NYSE: ATLS) (“Atlas Energy” or “ATLS”) today reported operating and financial results for the first quarter 2012.

First Quarter 2012 Highlights & Results
  • In March 2012, Atlas Resource Partners, L.P. (NYSE: ARP) acquired the exploration and production business from ATLS. ATLS owns 100% of the general partner Class A units and incentive distribution rights, and an approximate 64% limited partner interest in ARP.
  • Distributable cash flow, a non-GAAP measure, of $13.6 million, or $0.26 per common unit (1) for the first quarter 2012;
  • ATLS declared a cash distribution of $0.25 per limited partner unit for the first quarter 2012 at a distribution coverage ratio of approximately 1.1x. The first quarter 2012 distribution represents a $0.14 per unit increase over the prior year comparable quarter and a $0.01 increase from fourth quarter 2011; and,
  • On a GAAP basis, net loss was $15.1 million for the first quarter 2012 compared to net income of $241.6 million for the prior year comparable period. The loss for the first quarter 2012 was caused primarily by an ARP non-cash asset impairment of approximately $7 million related to a legacy contract initiated prior to the acquisition from Chevron Corp. in February 2011 and expenses related to the ARP spinoff. The net income in the prior year was primarily attributable to Atlas Pipeline Partner, L.P.’s (NYSE: APL; “APL”) gain on sale of its ownership interest in the Laurel Mountain gathering system. Please see the reconciliation of GAAP net income (loss) to Adjusted EBITDA and distributable cash flow in the financial tables of this release for further information.

(1) A reconciliation of GAAP net loss to adjusted EBITDA and distributable cash flow is provided in the financial tables of this release.

Recent Events

Atlas Resource’s Barnett Shale Acquisition

On April 30, 2012, ARP acquired approximately 277 Bcfe of proved reserves, including undeveloped drilling locations, in the Barnett Shale in Texas from Carrizo Oil & Gas, Inc. (NASD: CRZO) for approximately $190 million, or $0.69 per mcfe. The acquisition of the Barnett Shale position increased ARP’s net proved reserves by over 160% to approximately 450 billion cubic feet equivalents (“Bcfe”). This transaction is expected to be immediately accretive to ARP’s adjusted EBITDA and distributable cash flow. The transaction was funded by a private placement of equity of approximately $120 million and approximately $70 million borrowed against ARP’s revolving credit facility.

Atlas Resource’s Mississippi Lime Joint Venture

On April 17, 2012, ARP acquired a 50% interest in approximately 14,500 net undeveloped acres in the core of the oil & liquids rich Mississippi Lime play in northwestern Oklahoma from subsidiaries of Equal Energy, Ltd. (“Equal”) (NYSE: EQU; TSX: EQU) for approximately $18 million, which was funded through borrowings under ARP’s revolving credit facility. The acreage position is located in Alfalfa, Garfield and Grant Counties, Oklahoma and is almost entirely held by Equal’s existing production from the Hunton formation.

Atlas Resource First Quarter 2012 Highlights
  • On April 17, 2012, ARP declared its initial quarterly cash distribution of $0.12 per unit, which was prorated for the partial first quarter 2012. The distribution is payable Tuesday, May 15, 2012 to ARP unitholders of record as of Friday, April 27, 2012. ATLS earned approximately $2.6 million of cash distributions based upon ARP’s recently announced first quarter 2012 distribution.
  • ARP’s average net daily production for the first quarter 2012 was 39.4 million cubic feet equivalents per day (“Mmcfed”), an increase of approximately 4.2 Mmcfed, or 12%, compared with the fourth quarter 2011. The increase was primarily due to additional Marcellus Shale wells connected in southwestern Pennsylvania during the quarter.
  • Drilled 60 net wells within ARP’s investment partnerships during the first quarter 2012 compared with 20 net wells for the prior year comparable period, a 300% increase. At March 31, 2012, ARP had $28.0 million of funds raised from its investment partnerships that had not been applied to the completion of wells at period end, and thus at quarter end had not yet been recognized as well construction and completion revenue on its consolidated combined statements of operations. ARP expects to recognize this amount as revenue during the remainder of 2012.
  • ATLS owns a 100% of the general partner Class A units and the incentive distribution rights, and a 64% 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 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 Resource first quarter 2012 earnings release for additional details on its financial results.

Atlas Pipeline First Quarter 2012 Highlights

  • On April 25, 2012, APL declared a distribution for the first quarter of 2012 of $0.56 per common limited partner unit to holders of record on May 8, 2012, which will be paid on May 15, 2012. ATLS earned approximately $5.4 million of cash distributions based upon APL’s recently announced first quarter 2012 distribution.
  • During the first quarter 2012, APL operated at or above nameplate capacity on all of its gathering and processing systems in the Mid Continent. APL processed approximately 633 million cubic feet per day (“Mmcfd”) of natural gas in the first quarter 2012 amongst its WestOK, WestTX and Velma systems, a 31% increase over the prior year comparable quarter’s volumes. Record high volumes of approximately 60,800 bbl per day of gross natural gas liquids were generated from APL’s three processing systems in Oklahoma and Texas.
  • ATLS owns a 2.0% general partner interest, all of the incentive distribution rights, and a 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 first quarter 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 $2.5 million for the first quarter 2012, a $2.0 million increase from the prior year first quarter. In February 2011, ATLS completed its acquisition of the exploration and production operations from Chevron Corp., which assumed the majority of Atlas' expenses in the prior year first quarter. 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 and ARP, was $0.1 million for the first quarter 2012.
  • ARP recognized a $7.0 million loss on asset disposal during the first quarter 2012 pertaining to its decision to terminate a farm out agreement with a third party for well drilling in the South Knox area of the New Albany Shale that was originally entered into in 2010. The farm out agreement, which was a legacy contract initiated prior to the acquisition from Chevron Corp. in February 2011, contained certain well drilling targets for ARP to maintain ownership of the South Knox processing plant, which ARP’s management decided in 2012 to not pursue due to the current natural gas price environment. As a result, ARP yielded ownership of the processing plant and recorded a loss related to the net book values of those assets as of March 31, 2012.

Interested parties are invited to access the live webcast of an investor call with management regarding Atlas Energy, L.P.’s first quarter 2012 results on Tuesday, May 8, 2012 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 Resource website and telephonically beginning at 11:00 a.m. ET on May 8, 2012 by dialing 888-286-8010, passcode: 75755395.

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 64% 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 11% 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 8,600 producing natural gas and oil wells, representing approximately 450 Bcfe of net proved reserves, 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 the midcontinent region of Oklahoma, southern Kansas, and northern and western Texas, APL owns and operates seven active gas processing plants as well as approximately 9,000 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’ 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 unit data)
 
Three Months Ended
March 31,
Revenues: 2012    

2011 (1)
Gas and oil production $ 17,164 $ 17,626
Well construction and completion 43,719 17,725
Gathering and processing 305,220 280,218
Administration and oversight 2,831 1,361
Well services 5,006 5,286
Loss on mark-to-market derivatives (2) (12,035 ) (21,645 )
Other, net   2,801     4,353  
Total revenues   364,706     304,924  
 
Costs and expenses:
Gas and oil production 4,505 3,921
Well construction and completion 37,695 15,021
Gathering and processing 251,924 236,984
Well services 2,430 2,360
General and administrative (1) 37,248 16,190
Depreciation, depletion and amortization   29,950     26,607  
Total costs and expenses   363,752     301,083  
 
Operating income 954 3,841
 
Gain (loss) on asset disposal (7,005 ) 255,947
Interest expense (1)   (9,091 )   (18,078 )
 
Income (loss) from continuing operations (15,142 ) 241,710
 
Loss from discontinued operations       (81 )
Net income (loss) (15,142 ) 241,629
 
Income attributable to non-controlling interests   (3,365 )   (211,378 )
Net income (loss) after non-controlling interests (18,507 ) 30,251
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 $ (18,507 ) $ 25,540  
 
Net income (loss) attributable to common limited partners per unit – basic and diluted:
Income (loss) from continuing operations attributable to common limited partners $ (0.36 ) $ 0.65
Loss from discontinued operations attributable to common limited partners        
Net income (loss) attributable to common limited partners $ (0.36 ) $ 0.65  
 
Weighted average common limited partner units outstanding:
Basic   51,294     39,010  
Diluted   51,294     39,245  
 
Net income (loss) attributable to common limited partners:
Income (loss) from continuing operations $ (18,507 ) $ 25,550
Loss from discontinued operations       (10 )
Net income (loss) attributable to common limited partners $ (18,507 ) $ 25,540  
 

(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 Corp (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 COMBINED BALANCE SHEETS

(unaudited; in thousands)
   

March 31,

December 31,

ASSETS

2012

2011

Current assets:

Cash and cash equivalents

$

45,349

$

77,376

Accounts receivable

126,090

136,853

Current portion of derivative asset

26,154

15,447

Prepaid expenses and other
 

19,850
 

59,234

Total current assets

217,443

288,910
 

Property, plant and equipment, net

2,164,021

2,093,283

Intangible assets, net

109,524

104,777

Investment in joint venture
85,975 86,879

Goodwill, net

31,784

31,784

Long-term derivative asset

25,111

30,941

Other assets, net
 

47,563
 

48,197

$

2,681,421

$

2,684,771
 

LIABILITIES AND PARTNERS’ CAPITAL
 

Current liabilities:

Current portion of long-term debt

$

4,011

$

2,085

Accounts payable

69,830

93,554

Liabilities associated with drilling contracts

27,998

71,719

Accrued producer liabilities

77,047

88,096

Current portion of derivative liability
1,642

Current portion of derivative payable to Drilling Partnerships

18,541

20,900

Accrued interest

9,760

1,629

Accrued well drilling and completion costs

20,404

17,585

Accrued liabilities
 

52,963
 

61,653

Total current liabilities

282,196

357,221
 

Long-term debt, less current portion

626,314

522,055

Long-term derivative payable to Drilling Partnerships

11,499

15,272

Asset retirement obligation and other

54,152

46,142
 

Commitments and contingencies
 

Partners’ Capital:

Common limited partners’ interests

442,700

554,999

Accumulated other comprehensive income
 

32,961
 

29,376

475,661

584,375

Non-controlling interests
 

1,231,599
 

1,159,706

Total partners’ capital
 

1,707,260
 

1,744,081

$

2,681,421

$

2,684,771
 
ATLAS ENERGY, L.P.
Financial and Operating Highlights
 
Three Months Ended
March 31,
2012  

2011 (1)
 
Net income (loss) attributable to common limited partners per unit - basic $ (0.36 ) $ 0.65
 
Distributable cash flow per unit (2)(3) $ 0.26 $ 0.14
 
Cash distributions paid per unit (4) $ 0.25 $ 0.11
 
ATLAS RESOURCE:
Production volume: (5)(6)
Natural gas (Mcfd) 35,060 32,655
Oil (Bpd) 305 262
Natural gas liquids (Bpd)   422     465  
Total (Mcfed)   39,420     37,019  
 
Average sales prices: (6)
Natural gas (per Mcf) (7) $ 4.33 $ 5.46
Oil (per Bbl) (8) $ 100.41 $ 87.39
Natural gas liquids (per gallon) $ 1.04 $ 1.05
 
Production costs: (6)(9)
Lease operating expenses per Mcfe (10) $ 1.05 $ 0.98
Production taxes per Mcfe   0.11     0.11  
Total production costs per Mcfe (10) $ 1.16 $ 1.09
 
ATLAS PIPELINE:
Production volume: (6)
Gathered gas volume(Mcfd) 678,985 527,576
Processed gas volume (Mcfd) 632,713 486,840
Residue gas volume (Mcfd) 512,297 384,271
Processed NGL volume (Bpd) 60,806 51,138
Condensate volume (Bpd) 2,908 2,413
 
Average sales prices: (6)
Natural gas (per Mcf) $ 2.54 $ 3.94
Condensate (per Bbl) $ 97.44 $ 88.29
Natural gas liquids (per gallon) $ 1.03 $ 1.10
 

(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 51,294,000 for the three months ended March 31, 2012. For the three months ended March 31, 2011, the weighted average common limited partner units outstanding 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 cash distribution declared of $0.11 per limited partner unit for the 1 st quarter 2011 reflects 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 $2.88 per Mcf and $4.47 per Mcf for the three months ended March 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 $3.98 per Mcf ($2.53 per Mcf before the effects of financial hedging) and $4.67 per Mcf ($3.68 per Mcf before the effects of financial hedging) for the three months ended March 31, 2012 and 2011, respectively.
 
(8) ARP’s average sales price for oil before the effects of financial hedging was $100.41 per barrel and $87.39 per barrel for the three months ended March 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 $0.84 per Mcfe ($0.95 per Mcfe for total production costs) and $0.69 per Mcfe ($0.80 per Mcfe for total production costs) for the three months ended March 31, 2012 and 2011, respectively.
 
(10) First quarter 2011 amount was adjusted to reflect current period classification resulting from the misclassification of amounts lease operating production expenses and transportation production expenses.
 
ATLAS ENERGY, L.P.
Financial Information

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

2011 (1)
 
Atlas Resource Cash Distributions Earned (2) :
Limited Partner Units $ 2,515 $
Class A Units (2%) 64
Incentive Distribution Rights        
Total Atlas Resource Cash Distributions Earned (2)   2,579      
per limited partner unit $ 0.12 $
 
Atlas Pipeline Cash Distributions Earned (2) :
Limited Partner Units 3,222 2,302
General Partner 2% Interest 648 428
Incentive Distribution Rights   1,569      
Total Atlas Pipeline Cash Distributions Earned (2)   5,439     2,730  
per limited partner unit $ 0.56 $ 0.40
 
Total Cash Distributions Earned 8,018 2,730
 
E&P Operations Adjusted EBITDA prior to spinoff on March 5, 2012 (3) 9,111 6,490
Cash general and administrative expenses (4) (2,460 ) (527 )
Other, net   249     394  
Adjusted EBITDA (5) 14,918 9,087
Cash interest expense (6) (133 ) (146 )
Maintenance capital expenditures (3)   (1,231 )   (1,666 )
Distributable Cash Flow (5) $ 13,554   $ 7,275  
 
Distributions Paid (7) $ 12,828 $ 5,635
per limited partner unit $ 0.25 $ 0.11
Distribution coverage ratio 1.1x 1.3x
 
Reconciliation of non-GAAP measures to net income (loss) (5) :
Distributable cash flow $ 13,554 $ 7,275
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) (9,111 )
Atlas Resource net loss attributable to common limited partners (4,942 )
Atlas Resource cash distributions earned (2) (2,579 )
Atlas Pipeline net income attributable to common limited partners 1,839 30,194
Atlas Pipeline cash distributions earned (2) (5,439 ) (2,730 )
Non-recurring spinoff and acquisition costs (8,370 ) (2,087 )
Depreciation, depletion and amortization (7,701 )
Amortization of deferred finance costs (100 ) (4,932 )
Non-cash stock compensation expense (4,731 ) (501 )
Maintenance capital expenditures (3) 1,231 1,666
Other non-cash adjustments 141 806
Income attributable to non-controlling interests   3,365     211,378  
Net income (loss) $ (15,142 ) $ 241,629  
 

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, was utilized within ATLS’s financial covenants under its previously existing 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)
 
March 31, 2012
Atlas   Atlas   Atlas   Consolidated
Energy Resource Pipeline Combined
Total debt $ $ 17,000 $ 613,325 $ 630,325
Less: Cash   (11,500 )   (33,681 )   (168 )   (45,349 )
Total net debt /(cash) (11,500 ) (16,681 ) 613,157 584,976
 
Partners’ capital   475,661     468,161     1,213,151    

1,707,260 (1)

 
 
Total capitalization $ 464,161   $ 451,470   $ 1,826,308   $ 2,292,236  
 
Ratio of net debt to capitalization   0.00x

(1) Net of eliminated amounts.
 
  December 31, 2011
Atlas   Atlas   Atlas   Consolidated
Energy Resource Pipeline Combined
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 COMBINED STATEMENTS OF OPERATIONS

(unaudited; in thousands)
 

Three Months Ended March 31, 2012

 
  Atlas   Atlas   Atlas     Consolidated
Energy Resource (1) Pipeline Eliminations Combined
Revenues:
Gas and oil production $ $ 17,164 $ $ $ 17,164
Well construction and completion 43,719 43,719
Gathering and processing 3,314 301,906 305,220
Administration and oversight 2,831 2,831
Well services 5,006 5,006
Loss on mark-to-market derivatives (12,035 ) (12,035 )
Other, net   390     (933 )   3,344         2,801  
Total revenues   390     71,101     293,215         364,706  
 
Costs and expenses:
Gas and oil production 4,505 4,505
Well construction and completion 37,695 37,695
Gathering and processing 4,674 247,250 251,924
Well services 2,430 2,430
General and administrative 15,561 11,742 9,945 37,248

Depreciation, depletion and amortization

 

 

 

9,108
   

20,842
   

   

29,950
 
Total costs and expenses   15,561     70,154     278,037         363,752  
 
Operating income (loss) (15,171 ) 947 15,178 954
 
Loss on asset disposal (7,005 ) (7,005 )
Interest expense   (233 )   (150 )   (8,708 )       (9,091 )
 
Income (loss) from continuing operations (15,404 ) (6,208 ) 6,470 (15,142 )
Discontinued operations                    
Net income (loss) (15,404 ) (6,208 ) 6,470 (15,142 )

Income attributable to non-controlling interests
 

   

   

(1,536

)
 

(1,829

)
 

(3,365

)
Net income (loss) attributable to common limited partners

$

(15,404

)

$

(6,208

)

$

4,934
 

$

(1,829

)

$

(18,507

)
 
ATLAS ENERGY, L.P.
CONSOLIDATING COMBINED STATEMENTS OF OPERATIONS

(unaudited; in thousands)
 

Three Months Ended March 31, 2011
         
Atlas Atlas Atlas Consolidated
Energy

Resource (1)
Pipeline Eliminations Combined (1)
Revenues:
Gas and oil production $ $ 17,626 $ $ $ 17,626
Well construction and completion 17,725 17,725
Gathering and processing 4,499 275,719 280,218
Administration and oversight 1,361 1,361
Well services 5,286 5,286
Loss on mark-to-market derivatives (21,645 ) (21,645 )
Other, net   1,156     (53 )   3,250         4,353  
Total revenues   1,156     46,444     257,324         304,924  
 
Costs and expenses:
Gas and oil production 3,921 3,921
Well construction and completion 15,021 15,021
Gathering and processing 5,734 231,250 236,984
Well services 2,360 2,360
General and administrative 2,931 4,242 9,017 16,190

Depreciation, depletion and amortization
 

   

7,701
   

18,906
   

   

26,607
 
Total costs and expenses   2,931     38,979     259,173         301,083  
 
Operating income (loss) (1,775 ) 7,465 (1,849 ) 3,841
 
Gain on asset disposal 255,947 255,947
Interest expense   (5,633 )       (12,445 )       (18,078 )
 
Income (loss) from continuing operations (7,408 ) 7,465 241,653 241,710
Discontinued operations           (81 )       (81 )
Net income (loss) (7,408 ) 7,465 241,572 241,629

Income attributable to non-controlling interests
 

   

   

(1,187

)
 

(210,191

)
 

(211,378

)
Net income (loss) after non-controlling interests

(7,408

)

7,465

240,385

(210,191

)

30,251
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

$

(7,408

)

$

2,754
 

$

240,385
 

$

(210,191

)

$

25,540
 
 

(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 COMBINED BALANCE SHEETS

(unaudited; in thousands)
 

March 31, 2012
         
Atlas Atlas Atlas
ASSETS Energy Resource Pipeline Eliminations Consolidated
Current assets:
Cash and cash equivalents $ 11,500 $ 33,681 $ 168 $ $ 45,349
Accounts receivable 2 21,450 104,638 126,090

Receivable from (advances from) affiliates

2,995

106

(3,101

)

Current portion of derivative asset 26,154 26,154
Prepaid expenses and other   410   6,614   12,826         19,850
Total current assets 14,907 88,005 114,531 217,443
Property, plant and equipment, net 521,671 1,642,350 2,164,021
Goodwill and intangible assets, net 33,238 108,070 141,308
Long-term derivative asset 20,311 4,800 25,111
Investment in joint venture 85,975 85,975
Investment in subsidiaries 449,713 (449,713 )
Other assets, net   20,722   4,750   22,091         47,563
$ 485,342 $ 667,975 $ 1,977,817   $ (449,713 ) $ 2,681,421
 
LIABILITIES AND PARTNERS’ CAPITAL
 
Current liabilities:
Current portion of long-term debt $ $ $ 4,011 $ $ 4,011
Accounts payable 807 33,291 35,732 69,830

Liabilities associated with drilling contracts

27,998

27,998
Accrued producer liabilities 77,047 77,047
Current portion of derivative liability

1,642

1,642

Current portion of derivative payable to Partnerships

18,541

18,541
Accrued interest 5 9,755 9,760

Accrued well drilling and completion costs

20,404

20,404
Accrued liabilities   7,619   24,307   21,037         52,963
Total current liabilities 8,426 124,546 149,224 282,196
Long-term debt, less current portion 17,000 609,314 626,314
Long-term derivative liability
Long-term derivative payable to Partnerships

11,499

11,499
Other long-term liabilities 1,255 46,769 6,128 54,152
 
Partners’ Capital:
Common limited partners’ interests 442,700 426,663 1,243,222 (1,669,885 ) 442,700
Accumulated other comprehensive income (loss)  

32,961
 

41,498
 

(3,244

)
 

(38,254

)
 

32,961
475,661 468,161 1,239,978 (1,708,139 ) 475,661
Non-controlling interests       (26,827 )   1,258,426     1,231,599
Total partners’ capital   475,661   468,161   1,213,151     (449,713 )   1,707,260
$ 485,342 $ 667,975 $ 1,977,817   $ (449,713 ) $ 2,681,421
 
ATLAS ENERGY, L.P.
CONDENSED CONSOLIDATING COMBINED 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
Prepaid expenses and other   1,462   42,131     15,641         59,234
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 liability

Current portion of derivative payable to 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 liability
Long-term derivative payable to Partnerships

15,272

15,272
Other long-term liabilities 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
   
Overall
Ownership
Interest

Atlas Energy Ownership Interests as of March 31, 2012:
Amount Percentage
 
ATLAS RESOURCE:
General partner interest 100% 2.0%
Common units 20,960,000 78.4%
Incentive distribution rights 100% N/A
Total Atlas Energy ownership interests in Atlas Resource 80.4%
 
ATLAS PIPELINE:
General partner interest 100% 2.0%
Common units 5,754,253 10.5%
Incentive distribution rights 100% N/A
Total Atlas Energy ownership interests in Atlas Pipeline 12.5%
 
LIGHTFOOT CAPITAL PARTNERS, GP LLC:
Approximate general partner ownership interest 15.9%
Approximate limited partner ownership interest 12.1%

Copyright Business Wire 2010

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