Atlas Resource Partners, L.P. Reports Operating and Financial Results for the Fourth Quarter and Ful

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Atlas Resource Partners, L.P. Reports Operating and Financial Results for the Fourth Quarter and Full Year 2012

  • Atlas Resource Partners (ARP) achieved record average net production of 110.1 Mmcfed for the fourth quarter 2012, a 14% increase over the third quarter 2012
  • ARP closed its acquisition of oil & gas properties in the Marble Falls region of the Fort Worth Basin from DTE Energy for approximately $255 million; ARP completed approximately $650 million in acquisitions in the Fort Worth Basin during 2012
  • Adjusted EBITDA and distributable cash flow for the fourth quarter 2012 grew to $31.8 million and $27.5 million, respectively
  • ARP increased its quarterly distribution to $0.48 per limited partner unit for the fourth quarter 2012, a 12% increase from the third quarter 2012 distribution

PHILADELPHIA--(BUSINESS WIRE)-- Atlas Resource Partners, L.P. (NYSE: ARP) ("ARP" or "the Company") has reported operating and financial results for the fourth quarter and full year 2012.

Matthew A. Jones, President and Chief Operating Officer of ARP, said, "Our results for the fourth quarter highlight the meaningful progress we have made towards our objectives in expanding our enterprise through a strong asset base. This is evidenced by ARP's completion in less than a year of approximately $650 million in acquisitions of valuable oil & gas reserves and undeveloped positions in the Fort Worth Basin. Notably, the recently completed acquisition in the Marble Falls region fully compliments our already well-established assets and operating team in Fort Worth, and we look forward to the contributions of this oil & liquids play to our production margin. We have also made further improvements in our efficiency of operations and drilling activities. As a result, we expect our efforts to drive future cash flow growth while maintaining a solid capital position."


Fourth Quarter and Full Year 2012 Results

  • Adjusted earnings before interest, income taxes, depreciation and amortization ("adjusted EBITDA"), a non-GAAP measure, of $31.8 million(1), or $0.66 per common unit, for the fourth quarter 2012, which represents a $9.0 million or 40% increase from the third quarter 2012, and $84.5 million for the full year 2012;
  • Distributable cash flow, a non-GAAP measure, of $27.5 million(1), or $0.56 per common unit, for the fourth quarter 2012, which represents a $9.1 million or 49% increase, and $64.1 million for the full year 2012;
  • ARP declared a cash distribution of $0.48 per limited partner unit for the fourth quarter 2012, at a coverage ratio of approximately 1.2x; and,
  • On a GAAP basis, net loss was $18.9 million for the fourth quarter 2012 compared to $4.7 million for the prior year comparable period. The loss for each period was caused principally by non-cash expenses, including $9.5 million of asset impairment write downs on certain non-core legacy oil and gas properties and non-cash compensation expense. Please see the reconciliation of GAAP net loss to adjusted EBITDA 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

Acquisition of Barnett Shale/Marble Falls properties from DTE Energy

On December 20, 2012, ARP completed its acquisition DTE Gas Resources, LLC, an affiliate of DTE Energy Company ("DTE"), which owned approximately 35 million barrels of oil equivalents (MMboe) of proved reserves and substantial resource potential in the Fort Worth Basin in Texas for approximately $255 million. This transaction represented ARP's third acquisition in 2012 in the Fort Worth Basin, and the Company has invested a total of approximately $650 million to acquire estimated proved reserves of over 700 billion cubic feet of natural gas equivalents (Bcfe) at the time of acquisition.

Included in this transaction was approximately 88,000 net acres in the Fort Worth Basin of Texas, primarily in Jack County, offsetting ARP's current Barnett Shale position. This acreage position includes approximately 75,000 net acres prospective for the oil and NGL rich Marble Falls play, in which there are approximately 700 identified vertical drilling locations in ARP's position. ARP also believes that there are further potential development opportunities through vertical down-spacing and horizontal drilling in the Marble Falls formation. ARP commenced initial drilling operations in the Marble Falls play in January 2013.

Issuance of $275 million 7.75% 2021 Senior Notes

On January 23, 2013, ARP issued $275 million of 7.75% Senior Notes due 2021 in a private placement transaction issued at par. The Partnership received net proceeds of $268.3 million after underwriting commissions and other transaction costs, and utilized the proceeds to repay and terminate ARP's $75.4 million term loan and reduce the outstanding balance on its revolving credit facility. The senior notes are subject to a registration rights agreement entered in connection with the transaction, which requires ARP, among other things, to file a registration statement with the SEC and exchange the privately placed notes for registered notes by certain dates.

Year End 2012 Oil & Gas Reserves

Throughout 2012, ARP substantially increased its oil & gas reserves and undeveloped properties through both strategic acquisitions as well as organic development. This activity, highlighted by the acquisitions of producing oil & gas assets in the Barnett Shale and Marble Falls regions of the Fort Worth Basin, resulted in a significant increase in ARP's proved reserves as of year end 2012.

As of December 31, 2012, ARP had approximately 911.0 Bcfe of net proved oil & gas reserves at a PV-10 value of approximately $990.4 million, based upon NYMEX forward strip prices as of February 11, 2013. This compares to net proved reserves of approximately 167 Bcfe as of the end of the 2011, representing an increase of over 445%. Gross proved reserves managed by ARP (including those on behalf of the Company, its drilling partners in its investment programs and other operating partners) were approximately 1.63 trillion cubic feet of natural gas equivalents (Tcfe) as of year end 2012, using similar NYMEX price assumptions.

Based on the SEC average price assumptions of $2.76 per mcf for natural gas and $94.71 per barrel for crude oil, net proved oil and gas reserves were 723.4 Bcfe at a PV-10 amount of approximately $619.9 million, which does not include the value of ARP's commodity derivatives. The fair value of ARP's commodity derivatives at December 31, 2012 was approximately $17.5 million.

E&P Operations

  • Average net daily production for the fourth quarter 2012 was 110.1 million cubic feet of natural gas equivalents per day (Mmcfed), an increase of 13.9 Mmcfed, or 14%, compared with the third quarter 2012. The increase was primarily due to a full quarter's volume from the acquisition of the remaining 50% interest in Equal Energy, Ltd.'s approximately 8,500 net undeveloped acres in the core of the Mississippi Lime play in northwestern Oklahoma in September 2012, and a full quarter's volume from the acquisition of Titan Operating, LLC ("Titan") in the Barnett Shale in July 2012.
  • Investment partnership margin(2) contributed $10.7 million to Adjusted EBITDA and distributable cash flow for the fourth quarter 2012. In December 2012, ARP completed fundraising for Atlas Resources Series 32 - 2012, raising a total of approximately $127.1 million in investor capital.

(2) Investment partnership margin is comprised of Well Construction and Completion margin, Well Services margin and Administration and Oversight Fee revenues.

Hedge Positions

  • ARP expanded its natural gas and oil hedge positions during the fourth quarter 2012. ARP currently has approximately 114.9 Bcfe of its future production hedged through 2017. A summary of ARP's current derivative positions as of February 21, 2013 is provided in the financial tables of this release.

Corporate Expenses & Capital Position

  • Cash general and administrative expense was $9.0 million for the fourth quarter 2012, consistent with the third quarter 2012 and a $6.3 million decrease from the prior year fourth quarter. The decrease from prior year fourth quarter was principally due to higher allocations of management time and corporate expenses in the prior year by Atlas Energy, L.P., which was prior to ARP's spinoff in March 2012.
  • Cash interest expense was $0.9 million for the fourth quarter 2012, which was consistent with the third quarter 2012. As of December 31, 2012, ARP had $351.4 million of total debt, including a $75.4 million term loan and $276.0 million outstanding under its revolving credit facility, which has a current borrowing base of $368.8 million, and a cash position of $23.2 million. In January 2013, ARP issued $275 million of 7.75% Senior Notes due 2021 and received net proceeds of $268.3 million after underwriting commissions and other transaction costs, which were utilized to repay and terminate the term loan and reduce the outstanding balance on its revolving credit facility.

Interested parties are invited to access the live webcast of an investor call with management regarding Atlas Resource Partners, L.P.'s fourthquarter 2012 results on Friday, February 22, 2013 at 9:00 am ET by going to the Investor Relations section of Atlas Resource's website at www.atlasresourcepartners.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 February 22, 2013 by dialing 888-286-8010, passcode: 12321370.

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

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

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

Cautionary Note Regarding Forward-Looking Statements

This document contains forward-looking statements that involve a number of assumptions, risks and uncertainties that could cause actual results to differ materially from those contained in the forward-looking statements.ARP 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, ARP's 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; ARP's 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 ARP's reports filed with the U.S. Securities and Exchange Commission, including quarterly reports on Form 10-Q, current reports on Form 8-K and annual reports on Form 10-K. Forward-looking statements speak only as of the date hereof, and ARP assumes no obligation to update such statements, except as may be required by applicable law.

 
ATLAS RESOURCE PARTNERS, L.P.
CONSOLIDATED COMBINED STATEMENTS OF OPERATIONS

(unaudited; in thousands, except per unit data)

 
Three Months EndedYears Ended
December 31,December 31,
2012 20112012 2011
Revenues:
Gas and oil production$31,578$15,325$92,901$66,979
Well construction and completion39,21970,947131,496135,283
Gathering and processing5,9563,69816,26717,746
Administration and oversight3,2242,66811,8107,741
Well services4,6974,75220,04119,803
Other, net 66  85  (4,886) (30)
Total revenues 84,740  97,475  267,629  247,522 
 
Costs and expenses:
Gas and oil production10,3775,14726,62417,100
Well construction and completion34,19760,876114,079115,630
Gathering and processing6,3064,46519,49120,842
Well services2,2042,6619,2808,738
General and administrative20,69615,26169,12327,536
Chevron transaction expense7,670
Depreciation, depletion and amortization18,7346,85052,58230,869
Asset impairment 9,507  6,995  9,507  6,995 
Total costs and expenses 102,021  102,255  308,356  227,710 
 
Operating income (loss)(17,281)(4,780)(40,727)19,812
 
Gain (loss) on asset sales and disposal3939(6,980)87
Interest expense (1,666)   (4,195)  
 
Net income (loss)(18,908)(4,741)(51,902)19,899
 
Preferred limited partner dividends (1,842)   (3,063)  
Net income (loss) attributable to owner's interest, common limited partners and the general partner

$

(20,750

)

$

(4,741

)

$

(54,965

)

$

19,899

 
 
Allocation of net income (loss):

Portion applicable to owner's interest (period prior to the transfer of assets on March 5, 2012)

$

$

(4,741

)

 

$

250

$

19,899

 

Portion applicable to common limited partners and general partner's interests (period subsequent to the transfer of assets on March 5, 2012)

 

(20,750

)

 

  

(55,215

)

 

 

 

Net income (loss) attributable to owner's interest, common limited partners and the general partner

$(20,750

)

$(4,741

)

$(54,965)$19,899 
 
Allocation of net loss attributable to common limited partners and the general partner:
General partner's interest$(266)$$(955)$
Common limited partners' interest (20,484)   (54,260)  
Net loss attributable to common limited partners and the general partner$(20,750)

$

 $(55,215)

$

 
 
Net loss attributable to common limited partners per unit:
Basic$(0.53)$ $(1.59)$ 
Diluted$(0.53)$ $(1.59)$ 
 
Weighted average common limited partner units outstanding:
Basic 39,003    34,039   
Diluted 39,003    34,039   
 

ATLAS RESOURCE PARTNERS, L.P.

CONSOLIDATED COMBINED BALANCE SHEETS

(unaudited; in thousands)
 

December 31,

ASSETS

2012

 

2011

Current assets:

Cash and cash equivalents

$

23,188

$

54,708

Accounts receivable

38,718

20,572

Current portion of derivative asset

12,274

13,801

Subscriptions receivable

55,35734,455

Prepaid expenses and other

 

9,063

 

7,677

Total current assets

138,600

131,213

 

Property, plant and equipment, net

1,302,228

520,883

Goodwill and intangible assets, net

33,104

33,285

Long-term derivative asset

8,898

16,128

Other assets, net

 

16,122

 

857

$

1,498,952

$

702,366

 

LIABILITIES AND PARTNERS' CAPITAL/EQUITY

 

Current liabilities:

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