Atlas Pipeline Partners' Management Present At Barclays CEO Energy/Power Conference (Transcript)

Atlas Pipeline Partners LP (APL)

Barclays CEO Energy/Power Conference Call

September 04, 2012, 04:25 pm ET

Executives

Trey Karlovich - CFO

Analysts

Helen Ryoo - Barclays

Presentation

Helen Ryoo - Barclays

Good afternoon. I am Helen Ryoo, MLP analyst at Barclays last, but not least our final presenting company for the day is Atlas Pipeline Partners. It's my pleasure to introduce Trey Karlovich, Chief Financial Officer.

Trey Karlovich

Thanks, Helen. Sorry, customary forward-looking statement slide. So, Atlas Pipeline Partners, we're a gathering and processing master limited partnership located in the Permian Basin, the Woodford Shale and the Mississippi Lime areas and the Mid-Continent.

We also own a 20% interest in an NGL line in West Texas, West Texas LPG that's operated by Chevron.

So the story about our pipeline. Atlas Pipeline, like I said, is in three very strong producing areas in the Mid-Continent. We set ourselves up to grow this business through significant internal growth capital that we've invested over the past two years. We're in the middle of a 600 million investment program that we spend about approximately 70% on. We've recently completed a new processing facility on two of our plants, we have a third one that will come up in the first quarter of next year.

As you can see, the growth that we've sustained over the past two years is been significant. Distributable cash flow last year increased 62%, our distribution increased this quarter compared to last quarter was a 19% increase. And we are looking to continue to grow that distribution going into next year.

As I mentioned our new facilities, two of them have come online recently, another will come online in the first quarter. We expect to get incremental EBTIDA from those facilities beginning in the first half of 2013 when we get incremental NGL takeaway. We've had a very strategic and disciplined approach to growing our business.

We’ve had capital discipline, we focused on projects of north of 20% rate of return. Those are internal growth projects. We're also, when we look at external growth projects, we are very strategic in what we're looking at. We’re looking at areas with liquids rich production. We're not looking into dry gas areas. We feel like our focus is on processing NGLs, not just gathering. That being said, we are trying to take advantage of certain opportunities that presents themselves to us. We recently did a acquisition in the Barnett, that is a dry gas area that are strategic in that and we're gathering gas associated with Atlas Resource Partners which is a sister company of ours.

We've been very focused on derisking our business physically and financially. We have a very robust hedge book through 2013 and into 2014 and we're starting to look at 2015 as well. Physically we've also worked on restructuring our contracts so that we have less risk based contracts, primarily [keep whole]. We have lowered our [keep whole] exposure over the past two years and look to continue to do so going forward. We've added fee based contracts on our Velma system as well as the West Texas WTLPG assets.

We continue to look at fee based businesses, contract structures. We also are looking at adding percent of proceed contract, percent of proceeds we feel like aligns us with the producers so that our interest are aligned with theirs. As we grow we look to maintain our balance sheet, we have certain target metrics for leverage, liquidity distribution coverage. We don’t want our leverage to go over four times, that’s industry average in the MLP gathering and processing space.

We want to be better than average from a leverage standpoint. We want to keep our liquidity north of a $100 million and we also want to keep our distribution coverage on a 12-month period over 1.15 times. We feel like that enables us to manage through low commodity price periods like we were seeing currently.

And we are looking to strategically grow our business. Like I mentioned, we are looking at opportunities primarily in liquids rich areas, but we have a robust list of projects associated with our current assets as well. This is a list of what we have looking ahead. As I mentioned we have a new processing facility on each of our plants. We are looking at additional processing capacity on top of that. We feel like we have the capability to add processing at each one of our locations, the key being making sure that we have not only the gas to fill those facilities but the NGL takeaway in the fractionation space going forward.

A quick overview for each of our systems. We have over 9100 miles of pipe, nine processing plants primarily in three areas. Most of these facilities are new, installed in 2005 or later. We do have a couple of legacy plants that we do run, however those plants do get very high efficiencies. During the second quarter, we processed about 680 million a day. Today that number is over 700 million a day. We made 61000 barrels of NGLs and 3500 barrels of condensate.

As you can see our assets are primarily located in Oklahoma and Texas. We reach in to Kansas as well as in Mississippi Lime. Again Mississipi Lime, Permian Basin and the Woodford Shale are primary areas of operation. So why the growth on our assets. As you can see here by production. We have actually been volumes on our system have been outpacing our processing capacity over the past four quarters.

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