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Highlights of Atlas Energy's operations (as previously reported) and financial results include the following:
-- Atlas Energy successfully drilled and completed two additional horizontal Marcellus Shale wells in southwestern Pennsylvania: one in western Fayette County and another in eastern Greene County. The Fayette County well, which is the first horizontal Marcellus Shale well drilled and completed in the county, has produced into a pipeline an average of 3.3 million cubic feet per day ("Mmcf/d") for its first 30 days. This well inclined for most of its first 30 days and is showing very little decline after 40 days. The Company's second horizontal Marcellus Shale well drilled during 2009 in Greene County is exhibiting a similar flat production profile after an initial peak rate of 3.5 Mmcf/d. Both of these wells are producing at rates that exceed the Company's assumed 4 billion cubic feet ("Bcf") type curve. Atlas's last four horizontal Marcellus Shale wells that were turned into line in southwestern Pennsylvania had an average peak 24-hour rate of 5.1 Mmcfe/d;
-- During the first nine months of 2009, Atlas successfully drilled 14 horizontal Marcellus Shale wells. Four of these wells are online, one is flowing but not yet online, three will be returned to production as a gas processing plant has been brought back onto production this week, and six are yet to be frac'd;
-- Adjusted earnings before interest, income taxes, depreciation and amortization ("adjusted EBITDA"), a non-GAAP measure, was $56.2 million for the Company's Exploration and Production operations ("E&P Operations") for the third quarter 2009, as compared with $75.9 million for the prior year comparable quarter. The decrease from the prior year comparable quarter was primarily related to 1) lower commodity prices, partially offset by higher natural gas production volumes and strong hedge protection, and 2) the comparable year over year timing of the offering of direct investment programs (funds received in the fourth quarter 2009 are already five times higher than funds received in the third quarter 2009). As a result of the currently realized and continued expected increase in direct investment funds received in the fourth quarter 2009, and higher anticipated production volumes and realized natural gas prices compared to the third quarter 2009, the Company expects to generate $68 million to $72 million of adjusted EBITDA in the fourth quarter 2009. A reconciliation from net income to adjusted EBITDA is provided in the financial tables of this release;
-- The Company reaffirms its 2009 total production guidance of 37 to 37.5 billion cubic feet equivalents ("Bcfe"), up approximately 7% from 2008, and between 45 and 50 Bcfe for 2010, up 28% at the midpoint compared to estimated 2009 production. Due to increasing Marcellus Shale production, Atlas Energy expects to exit 2009 with over 50 million cubic feet ("Mmcf") per day of net production in Appalachia and expects this figure to more than double by the end of 2010;
-- Atlas Energy's natural gas and oil production in Appalachia was 41.3 million cubic feet equivalents ("Mmcfe") per day for the third quarter 2009, compared to 35.7 Mmcfe per day for the prior year third quarter, up approximately 16%. The increase is due primarily to Atlas Energy's expanding drilling programs and increased production from the Marcellus Shale. Michigan segment natural gas production was 58.6 Mmcfe per day in the third quarter 2009, compared to 60.5 Mmcfe per day in the prior year comparable quarter, but higher than the second quarter 2009 production of 58.1 Mmcfe per day; and
-- Adjusted net income was $3.8 million for the third quarter 2009 compared with $9.9 million for the prior year third quarter. Adjusted diluted net income per share was $0.09 for the third quarter 2009 compared with $0.23 per share for the third quarter 2008. Inclusive of the impact of the consolidation of Atlas Pipeline Partners, L.P. ("APL") and Atlas Pipeline Holdings, L.P. ("AHD") and other items, on a GAAP basis, the Company recognized a net loss of $0.7 million for the third quarter 2009 compared with net income of $24.1 million for the prior year third quarter. A reconciliation of net income to adjusted net income is provided in the financial tables of this release.
Recent Events
-- On September 29, 2009, Atlas America, Inc. and Atlas Energy Resources, LLC ("ATN") completed their merger (the "Merger") to form Atlas Energy, Inc. Atlas Energy's common stock continues to trade on NASDAQ under the symbol "ATLS." Atlas Energy expects to continue the accelerated expansion of its leading Marcellus Shale position in southwestern Pennsylvania with retained cash flows from operations. As a result of the Merger, Atlas Energy has a single class of publicly traded common equity with one board of directors.
-- Atlas Energy began marketing the $275 million Atlas Resources Public #18-2009 (C) drilling program (1) in September of this year. When combined with the $125 million Atlas Resources Public #18-2009 (B) drilling program completed earlier this year, Atlas expects to raise approximately $400 million in 2009 through its direct investment programs.
-- ATN's bank group, as a result of the regularly scheduled semi-annual review, approved ATN's borrowing base related to its senior secured revolving credit facility at $575 million. All other terms and conditions remain the same. JP Morgan led the group of 26 lenders in the review process. As of September 30, 2009, ATN had $270 million outstanding against the revolving facility.
Appalachia Segment
-- Atlas Energy drilled 19 gross vertical Marcellus Shale wells and 5 gross horizontal Marcellus Shale wells in the third quarter 2009.
-- As of September 30, 2009, the Company held approximately 873,600 net acres in the Appalachian Basin, of which approximately 599,800 were undeveloped.
-- As of September 30, 2009, the Company had an interest in approximately 9,900 gross producing wells in Appalachia, of which it operated approximately 85%.
-- Partnership management margin (2) was $18.1 million for the third quarter 2009, compared to $23.0 million for the prior year third quarter. The lower partnership management margin in the third quarter 2009 compared to the prior year was due primarily to the comparable year over year timing of the offering of direct investment programs.
Michigan/Indiana Segment
-- Natural gas and oil production from the Michigan segment averaged 58.6 Mmcfe per day during the third quarter 2009, up from 58.1 Mmcfe per day in the second quarter 2009.
-- At September 30, 2009, the Company had approximately 271,900 net acres in the Antrim Shale in Michigan, of which approximately 26,400 were undeveloped. The Company also had access to approximately 250,000 gross acres in the New Albany Shale in Indiana, of which approximately 243,000 acres were undeveloped.
Corporate and Other
-- General and administrative expense, excluding amounts attributable to APL and AHD, was $22.5 million for the third quarter 2009, compared to $14.4 million for the prior year comparable quarter. The increase in the third quarter 2009 compared to the prior year was primarily related to 1) $6.1 million of non-recurring expenses related to the Merger and 2) the timing of the offering and receipt of funds associated with the direct investment programs, which influences the capitalization of costs directly related to those programs.
-- Depreciation, depletion and amortization expense, excluding amounts attributable to APL and AHD, was $24.6 million in the third quarter 2009, compared to $23.6 million in the prior year comparable quarter. The increase was due primarily to the increase in production in the Company's Appalachia segment, notably from Marcellus Shale production.
-- Interest expense, excluding amounts attributable to APL and AHD, was $18.5 million for the third quarter 2009, compared to $14.8 million for the prior year third quarter. The increase in interest expense was primarily due to ATN's $200 million 12.5% senior note offering in July 2009, partially offset by lower average borrowings under its credit facility.
Hedging Summary
The Company entered into additional hedging contracts during the third quarter 2009 for its natural gas production.
A summary of the Company's current equity hedge positions as of November 5, 2009 is as follows:
Natural Gas
Fixed Price Swaps
Average
Production Period Fixed Price Volumes
Ended December 31, (per mcf)(1)(2) (per mcf)(1)
2009((3)) $ 8.48 7,338,385
2010 $ 7.75 25,551,562
2011 $ 7.20 16,073,364
2012 $ 7.23 13,954,642
2013 $ 7.27 9,886,929
Costless Collars
Average Average
Production Period Floor Price Ceiling Price Volumes
Ended December 31, (per mcf)(1)(2) (per mcf)(1)(2) (per mcf)(1)
2009((3)) $ 11.25 $ 15.68 42,746
2010 $ 8.03 $ 9.22 2,420,645
2011 $ 6.45 $ 7.68 8,685,232
2012 $ 6.67 $ 7.88 7,650,684
2013 $ 6.77 $ 8.00 8,773,111
Crude Oil
Fixed Price Swaps
Average
Production Period Fixed Price Volumes
Ended December 31, (per bbl)(1) (bbls)(1)
2009((3)) $ 98.85 9,017
2010 $ 97.30 36,977
2011 $ 69.77 32,194
2012 $ 71.55 26,139
2013 $ 72.26 5,900
Costless Collars
Average Average
Production Period Floor Price Ceiling Price Volumes
Ended December 31, (per bbl)(1) (per bbl)(1) (bbls)(1)
2009((3)) $ 85.00 $ 115.72 5,589
2010 $ 85.00 $ 112.72 23,442
2011 $ 60.00 $ 80.92 20,361
2012 $ 60.00 $ 86.50 16,777
2013 $ 60.00 $ 88.90 3,540
(1) "Mcf" represents thousand cubic feet; "bbl" represents barrel.
(2) Includes an estimated positive basis differential and Btu (British
thermal units) adjustment.
(3) Reflects hedges covering the last three months of 2009.
Interest in Atlas Pipeline and Atlas Pipeline Holdings
Through Atlas Energy's controlling interest in Atlas Pipeline Holdings, L.P. (NYSE: AHD), which owns and operates the general partner of Atlas Pipeline Partners, L.P. (NYSE: APL | Quote | Chart | News | PowerRating) and owns 5.8 million limited partner units in APL, the Company recognizes approximately 11% of APL's net income after eliminating minority interest from non-controlling parties. A consolidating statement of operations and balance sheet has been provided in the financial tables of the release, which segregates the Atlas Energy E&P Operations financial results from the Atlas Pipeline midstream financial results.
Interested parties are invited to access the live webcast of an investor call with management regarding Atlas Energy, Inc.'s third quarter 2009 results on Friday, November 6, 2009 at 9:00 am ET by going to the Investor Relations section of Atlas Energy's website at www.atlasenergyresources.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 6, 2009 by dialing 888-286-8010, passcode: 75002061.
(1) Atlas Energy's subsidiary serves as managing general partner of the partnership. A written prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended, may be obtained from Anthem Securities, Inc. (a subsidiary of Atlas Energy), 1550 Coraopolis Heights Rd. -- 3rd Floor, Moon Township, PA 15108.
(2) Partnership management margin is comprised of Well Construction & Completion margin, Well Services margin and Administration & Oversight Fee revenues.
The Company has a 100.0% ownership interest in Atlas Energy Resources, LLC ("ATN"), an approximate 2.2% direct ownership interest in Atlas Pipeline Partners, L.P. ("APL"), a publicly-traded limited partnership, and an approximate 64.4% limited partner interest and 100% of the general partner interest in Atlas Pipeline Holdings, L.P. ("AHD"). The Company's financial results are presented on a consolidated basis with those of ATN, AHD, and APL. Non-controlling minority interests in ATN, AHD, and APL are reflected as income (expense) in the Company's consolidated statements of operations and as a component of stockholders' equity on its consolidated balance sheet. A consolidating statement of operations and balance sheet has also been provided in the financial tables to the release for the comparable periods presented.
Please see the respective AHD and APL earnings releases for more information with regard to their third quarter 2009 financial results.
Atlas Energy, Inc. is one of the largest independent natural gas producers in the Appalachian and Michigan Basins and a leading producer in the Marcellus Shale in Pennsylvania. Atlas Energy, Inc. is also the country's largest sponsor and manager of tax-advantaged energy investment partnerships. Atlas Energy, Inc. also owns 1.1 million common units in Atlas Pipeline Partners, L.P. (NYSE: APL | Quote | Chart | News | PowerRating) and a 64% interest in Atlas Pipeline Holdings, L.P. (NYSE: AHD), a limited partnership which owns the general partner interest, all the incentive distribution rights and approximately 5.8 million common units of Atlas Pipeline Partners, L.P. For more information, please visit our website at www.atlasamerica.com, or contact Investor Relations at InvestorRelations@atlasamerica.com.
Atlas Pipeline Partners, L.P. is active in the gathering and processing segments of the midstream natural gas industry. In the Mid-Continent region of Oklahoma, southern Kansas, northern and western Texas and the Texas panhandle, APL owns and operates eight active gas processing plants and a treating facility, as well as approximately 8,750 miles of active intrastate gas gathering pipeline. In Appalachia, APL is a 49% joint venture partner with Williams in Laurel Mountain Midstream, LLC, which manages the natural gas gathering system in that region, namely from the Marcellus Shale in southwestern Pennsylvania. For more information, visit the Partnership's website at www.atlaspipelinepartners.com or contact investorrelations@atlaspipelinepartners.com.
Atlas Pipeline Holdings, L.P. is a limited partnership which owns and operates the general partner of Atlas Pipeline Partners, L.P., through which it owns a 2% general partner interest, all the incentive distribution rights and approximately 5.8 million common of Atlas Pipeline Partners, L.P.
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. Atlas Energy, Inc. 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 the benefits of the recently completed merger between a subsidiary of Atlas America and Atlas Energy Resources, including future financial and operating results, the combined company'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 price; inability to obtain capital needed for operations; the level of indebtedness; changes in government environmental policies; tax consequences of business transactions; and other risks, assumptions and uncertainties detailed from time to time in either company's reports filed with the U.S. Securities and Exchange Commission (the "SEC"), including each company's report on Form 10-K for the year ended December 31, 2008, and subsequent quarterly reports on Forms 10-Q. Forward-looking statements speak only as of the date hereof, and each company assumes no obligation to update such statements.
ATLAS ENERGY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited; in thousands, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
Revenue:
Well construction and completion $ 81,496 $ 116,987 $ 257,231 $ 343,466
Gas and oil production 65,986 81,235 207,908 236,417
Transmission, gathering and processing 205,603 410,942 555,373 1,218,359
Administration and oversight 3,149 5,216 9,644 15,370
Well services 5,012 5,299 14,911 15,363
Gain on asset sales 55 a^' 105,746 a^'
Gain (loss) on mark-to-market derivatives(1) 1,032 147,505 (17,245 ) (257,344 )
Other, net 4,851 3,818 11,696 11,842
Total revenue 367,184 771,002 1,145,264 1,583,473
Costs and expenses:
Well construction and completion 69,138 101,727 218,236 298,666
Gas and oil production 12,128 12,688 33,217 35,735
Transmission, gathering and processing 167,862 333,988 470,752 992,504
Well services 2,378 2,753 6,922 7,815
General and administrative 32,066 12,647 81,619 58,592
Depreciation, depletion and amortization 46,460 44,325 147,427 129,539
Total costs and expenses 330,032 508,128 958,173 1,522,851
Operating income (loss) 37,152 262,874 187,091 60,622
Interest expense (47,754 ) (37,331 ) (124,322 ) (106,538 )
Income (loss) from continuing operations before income (10,602 ) 225,543 62,769 (45,916 )
tax provision (benefit)
Provision (benefit) for income taxes (716 ) 13,647 5,555 12,288
Net income (loss) from continuing operations (9,886 ) 211,896 57,214 (58,204 )
Discontinued operations:
Gain on sale of discontinued operations (net of income
tax provision of $2,228 for the nine months ended
September 30, 2009) a^' a^' 48,851 a^'
Income from discontinued operations (net of income tax
provision of $277 for the three months ended
September 30, 2008 and $498 and $848 for the nine
months ended September 30, 2009 and 2008,
respectively) a^' 6,261 10,918 20,181
Net income (loss) (9,886 ) 218,157 116,983 (38,023 )
(Income) loss attributable to non-controlling 9,172 (194,054 ) (103,686 ) 60,777
interests
Net income (loss) attributable to common shareholders $ (714 ) $ 24,103 $ 13,297 $ 22,754
Net income (loss) attributable to common shareholders per share
- basic:
Income (loss) from continuing operations attributable to common $ (0.02 ) $ 0.59 $ 0.23 $ 0.54
shareholders
Discontinued operations attributable to common shareholders 0.00 0.01 0.11 0.03
Net income (loss) attributable to common shareholders $ (0.02 ) $ 0.60 $ 0.34 $ 0.57
Net income (loss) attributable to common shareholders per share -
diluted:
Income (loss) from continuing operations attributable to common $ (0.02 ) $ 0.56 $ 0.22 $ 0.51
shareholders
Discontinued operations attributable to common shareholders 0.00 0.01 0.11 0.03
Net income (loss) attributable to common shareholders $ (0.02 ) $ 0.57 $ 0.33 $ 0.54
Weighted average common shares outstanding:
Basic 39,780 40,093 39,460 40,251
Diluted 39,780 41,994 40,051 42,121
Income (loss) attributable to common shareholders:
Income (loss) from continuing operations (net of income
tax provision (benefit) of ($716) and $13,647 for the
three months ended September 30, 2009 and 2008,
respectively, and $5,555 and $12,288 for the nine
months ended September 30, 2009 and 2008,
respectively) $ (714 ) $ 23,670 $ 9,044 $ 21,431
Discontinued operations (net of income tax provision of
$277 for the three months ended September 30, 2008
and $2,726 and $848 for the nine months ended
September 30, 2009 and 2008, respectively) a^' 433 4,253 1,323
Net income (loss) attributable to common shareholders $ (714 ) $ 24,103 $ 13,297 $ 22,754
(1) Consists principally of hydrocarbon derivative gains / (losses) that
relate to the operating activities of the Company's consolidated
subsidiary, Atlas Pipeline, and the underlying hydrocarbon
derivatives do not represent present or potential future obligations
of the Company.
ATLAS ENERGY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited; in thousands, except per share data)
September 30, December 31,
ASSETS 2009 2008
Current assets:
Cash and cash equivalents $ 35,693 $ 104,496
Accounts receivable 145,894 172,427
Current portion of derivative asset 88,960 152,726
Prepaid expenses and other 28,781 57,679
Current assets of discontinued operations a^' 13,441
Total current assets 299,328 500,769
Property, plant and equipment, net 3,708,389 3,744,815
Goodwill and intangible assets, net 212,705 232,651
Long-term derivative asset 42,405 69,451
Investment in joint venture 133,740 a^'
Other assets, net 75,159 56,030
Long-term assets of discontinued operations a^' 242,165
$ 4,471,726 $ 4,845,881
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 12,000 $ a^'
Accounts payable 105,929 140,725
Liabilities associated with drilling contracts 16,590 96,883
Accrued producer liabilities 45,539 66,846
Current portion of derivative liability 46,570 73,776
Accrued and other current liabilities 188,783 138,424
Current liabilities of discontinued operations a^' 10,572
Total current liabilities 415,411 527,226
Long-term debt, less current portion 2,115,505 2,413,082
Deferred tax liability 51,158 242,058
Long-term derivative liability 33,847 59,103
Other long-term liabilities 71,962 74,844
Stockholders' equity:
Stockholders' equity 1,131,025 390,372
Accumulated other comprehensive income 50,351 21,143
1,181,376 411,515
Non-controlling interests 602,467 1,118,053
Total stockholders' equity 1,783,843 1,529,568
$ 4,471,726 $ 4,845,881
ATLAS ENERGY, INC.
Financial and Operating Highlights
Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
Net income attributable to common $ (0.02 ) $ 0.60 $ 0.34 $ 0.57
shareholders per share - basic
Adjusted net income attributable to common $ 0.09 $ 0.25 $ 0.63 $ 0.76
shareholders per share - basic(1)
Pro forma adjusted net income attributable to $ 0.10 $ 0.30 $ 0.65 $ 0.78
common shareholders per share - basic(1)
E&P Operations Discretionary Cash Flow per $ 0.58 $ 0.78 $ 2.18 $ 2.36
Share(2)
Production revenues (in thousands):
Gas $ 62,748 $ 77,253 $ 199,519 $ 224,345
Oil 3,238 3,982 8,389 12,072
Production volume:(3) (4)
Appalachia:
Gas (Mcfd) 38,579 33,228 39,749 31,929
Oil (Bpd) 460 413 442 410
Total (Mcfed) 41,339 35,706 42,401 34,389
Michigan:
Gas (Mcfd) 58,519 60,436 58,277 59,755
Oil (Bpd) 9 11 9 11
Total (Mcfed) 58,573 60,502 58,331 59,821
Total:
Gas (Mcfd) 97,098 93,664 98,026 91,684
Oil (Bpd) 469 424 451 421
Total (Mcfed) 99,912 96,208 100,732 94,210
Average sales prices: (4)
Gas (per Mcf) (5)(6) $ 7.29 $ 9.26 $ 7.67 $ 9.35
Oil (per Bbl)(7) 75.03 101.34 68.13 104.15
Production costs:(4)(8)
Lease operating expenses per Mcfe $ 0.81 $ 0.82 $ 0.84 $ 0.82
Production taxes per Mcfe 0.14 0.41 0.16 0.39
Total production costs per Mcfe $ 0.95 $ 1.23 $ 1.00 $ 1.21
Depletion per Mcfe(4) $ 2.55 $ 2.57 $ 2.79 $ 2.55
(1) A reconciliation from net income to adjusted net income attributable
to common shareholders per share and pro forma adjusted net income
attributable to common shareholders per share is provided in the
financial tables of this release.
(2) Calculation consists of discretionary cash flow divided by pro forma
weighted average common shares outstanding for the respective
period. A reconciliation from net income to discretionary cash flow
is provided in the financial tables of this release. Pro forma
weighted average common shares outstanding for the respective period
consists of the historical basic weighted average shares of the
Company for the respective period, adjusted for the 38.8 million
shares of the Company's common stock issued in connection with the
Merger.
(3) Production quantities consist of the sum of (i) the Company's
proportionate share of production from wells in which it has a
direct interest, based on the Company's proportionate net revenue
interest in such wells, and (ii) the Company's proportionate share
of production from wells owned by the investment partnerships in
which the Company 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.
(4) "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.
(5) The Company's average sales price for gas before the effects of
financial hedging was $3.20 and $10.49 per Mcf for the three months
ended September 30, 2009 and 2008, respectively, and $4.01 and
$10.03 per Mcf for the nine months ended September 30, 2009 and
2008, respectively. Including the effects of certain allocations of
the Company's production revenue to the investor partners within the
Company's investment partnerships, average gas sales prices for the
three and nine months ended September 30, 2009 was $7.06 per Mcf
($2.97 per Mcf before the effects of financial hedging) and $7.55
per Mcf ($3.89 per Mcf before the effects of financial hedging),
respectively.
(6) Includes cash proceeds of $0.3 million and $2.6 million for the
three months ended September 30, 2009 and 2008, respectively, and
$2.4 million and $10.5 million for the nine months ended September
30, 2009 and 2008, respectively, received from the settlement of
ineffective derivative gains associated with the acquisition of the
Company's Michigan operations but not reflected in the consolidated
statements of operations.
(7) The Company's average sales price for oil before the effects of
financial hedging was $62.81 and $106.94 per barrel for the three
months ended September 30, 2009 and 2008, respectively, and $52.30
and $108.09 per barrel for the nine months ended September 30, 2009
and 2008, respectively.
(8) 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. Including
the effects of the Company's proportionate share of lease operating
expenses associated with certain allocations of production revenue
to investor partners within its investment partnerships (see Note
5), lease operating expenses per Mcfe for the three and nine months
ended September 30, 2009 was $0.73 per Mcfe (total production costs
per Mcfe were $0.87) and $0.80 per Mcfe (total production costs per
Mcfe were $0.96), respectively.
ATLAS ENERGY, INC.
CAPITALIZATION INFORMATION
(unaudited;
in thousands, except per share data)
September 30, 2009 December 31, 2008
Atlas Atlas
Pipeline Pipeline
and Atlas and Atlas
Atlas Pipeline Atlas Pipeline
Energy Holdings Consolidated Energy Holdings Consolidated
Total debt $ 872,455 $ 1,255,050 $ 2,127,505 $ 873,655 $ 1,539,427 $ 2,413,082
Less: Cash (30,105 ) (5,588 ) (35,693 ) (97,211 ) (7,285 ) (104,496 )
Total net debt 842,350 1,249,462 2,091,812 776,444 1,532,142 2,308,586
Stockholders' equity 1,185,545 716,454 1,783,843(1) 1,168,768 588,889 1,529,568(1)
Total capitalization $ 2,027,895 $ 1,965,916 $ 3,875,655 $ 1,945,212 $ 2,121,031 $ 3,838,154
Ratio of net debt to 0.54x 0.60x
capitalization
(1) Net of eliminated amounts.
ATLAS ENERGY, INC.
CAPITAL EXPENDITURE DATA
(unaudited; in thousands, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008((1)) 2009 2008((1))
Atlas Energy $ 34,372 $ 89,300 $ 130,785 $ 224,970
Atlas Pipeline Partners 7,116 81,714 137,610 223,768
Consolidated capital expenditures $ 41,488 $ 171,014 $ 268,395 $ 448,738
(1) Restated to reflect amounts reclassified to discontinued operations
due to APL's sale of its NOARK gas gathering and interstate pipeline
system.
ATLAS ENERGY, INC.
Financial Information
(unaudited; in thousands, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
E&P Operations:
Well construction and completion margin $ 12,358 $ 15,260 $ 38,995 $ 44,800
Gas and oil production margin(1) 54,211 67,481 199,463 202,325
Administration and oversight margin 3,149 5,216 9,644 15,370
Well services margin 2,634 2,546 7,989 7,548
Gas gathering (1,874 ) (3,645 ) (6,720 ) (9,142 )
E&P Operations Gross Margin 70,478 86,858 249,371 260,901
Cash general and administrative costs(2) (15,390 ) (11,729 ) (41,824 ) (35,795 )
Other income (loss), net 1,082 737 (337 ) 1,622
E&P Operations Adjusted EBITDA(3) 56,170 75,866 207,210 226,728
Cash interest expense(4) (17,903 ) (14,099 ) (44,287 ) (40,398 )
Cash income tax refunds (payments) 7,298 a^' 7,298 a^'
E&P Operations Discretionary Cash Flow(3) 45,565 61,767 170,221 186,330
Capital expenditures (34,372 ) (89,300 ) (130,785 ) (224,970 )
E&P Operations Free Cash Flow(3)(5) $ 11,193 $ (27,533 ) $ 39,436 $ (38,640 )
Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
Reconciliation of non-GAAP measures to net income
attributable to common shareholders(3):
E&P Operations Discretionary Cash Flow $ 45,565 $ 61,767 $ 170,221 $ 186,330
Atlas Pipeline and Atlas Pipeline Holdings net (income) (2,614 ) 25,865 6,233 (1,326 )
loss attributable to common shareholders
Cash income tax payments (refunds) (7,298 ) a^' (7,298 ) a^'
Income tax benefit (provision) 716 (13,647 ) (5,555 ) (12,288 )
Non-recurring Merger costs (6,108 ) a^' (6,752 ) a^'
Depreciation, depletion and amortization (24,563 ) (23,584 ) (79,863 ) (68,339 )
Amortization of deferred finance costs (1,230 ) (670 ) (2,897 ) (2,182 )
Non-cash stock compensation expense (1,034 ) (2,706 ) (6,055 ) (8,121 )
Non-cash net loss on sale of assets (1,444 ) a^' (5,694 ) a^'
Income attributable to ATN non-controlling interests(6) (2,351 ) (20,361 ) (18,067 ) (60,811 )
Adjustment to reflect the cash impact of derivatives(1) (353 ) (2,561 ) (30,976 ) (10,509 )
Net income (loss) attributable to common $ (714 ) $ 24,103 $ 13,297 $ 22,754
shareholders
(1) Includes adjustments to reflect the cash impact of derivatives,
including (i) $28.5 million of cash proceeds received in May 2009
from the early settlement of natural gas and oil derivative
positions and (ii) cash proceeds received from the settlement of
ineffective derivative gains recognized in connection with the
acquisition of the Company's Michigan assets in June 2007 but not
reflected in its consolidated statements of operations for the three
and nine months ended September 30, 2009 and 2008.
(2) Excludes non-cash stock-compensation expense and non-recurring costs
incurred in connection with the Merger.
(3) Adjusted EBITDA, discretionary cash flow and net cash flow are
non-GAAP (generally accepted accounting principles) financial
measures under the rules of the Securities and Exchange Commission.
Management of the Company believes that adjusted EBITDA,
discretionary cash flow and net cash flow provide additional
information for evaluating the Company'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 Atlas Energy Resources'
financial covenants under its credit facility. Adjusted EBITDA,
discretionary cash flow and net 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) Excludes the impact of cash distributions paid by Atlas Energy
Resources, LLC to its non-controlling interests for periods prior to
the Merger on September 29, 2009.
(6) Represents the non-controlling interests in the net income (loss) of
Atlas Energy Resources, LLC prior to the Merger on September 29,
2009.
ATLAS ENERGY, INC.
Financial Information
(unaudited; in thousands, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
Reconciliation of net income (loss) to non-GAAP measure(1):
Net income (loss) attributable to common shareholders $ (714 ) $ 24,103 $ 13,297 $ 22,754
Atlas Pipeline and Atlas Pipeline Holdings loss 2,614 (25,865 ) (6,233 ) 1,326
(income) attributable to common shareholders, net
of attributable income tax provision (benefit)
Non-recurring Merger costs 6,108 a^' 6,752 a^'
Adjustments to reflect the cash impact of derivatives 353 2,561 30,976 10,509
Non-cash net loss on sale of assets 1,444 a^' 5,694 a^'
Non-cash compensation expense 1,034 2,706 6,055 8,121
Adjustment to non-controlling interests for the above items (4,295 ) (2,028 ) (24,192 ) (7,442 )
Tax effect of the above items (2,786 ) 8,387 (7,312 ) (4,529 )
Adjusted net income $ 3,758 $ 9,864 $ 25,037 $ 30,739
Adjusted net income per common share:
Basic $ 0.09 $ 0.25 $ 0.63 $ 0.76
Diluted $ 0.09 $ 0.23 $ 0.63 $ 0.73
Weighted average common shares outstanding:
Basic 39,780 40,093 39,460 40,251
Diluted 40,706 41,994 40,051 42,121
Pro forma adjusted net income per share(2):
Adjusted net income $ 3,758 $ 9,864 $ 25,037 $ 30,739
Adjustment to remove non-controlling interests for Atlas Energy 6,646 22,389 42,259 51,747
Resources
Tax effect of the above item (2,393 ) (8,198 ) (16,219 ) (18,940 )
Pro forma adjusted net income $ 8,011 $ 24,055 $ 51,077 $ 63,546
Pro forma adjusted net income per common
share:
Basic $ 0.10 $ 0.30 $ 0.65 $ 0.80
Diluted $ 0.10 $ 0.30 $ 0.65 $ 0.78
Pro forma weighted average common shares
outstanding(3):
Basic 78,136 78,869 78,095 79,027
Diluted 79,144 81,307 78,714 81,451
(1) Adjusted net income is a non-GAAP financial measure under the rules
of the Securities and Exchange Commission. Management of the Company
believes that the above financial measure provides additional
information with respect to the Company's ability to meet its
capital expense and working capital requirements. Adjusted net
income is not a measure of financial performance under GAAP and,
accordingly, should not be considered as a substitute for revenues,
net income or cash flows from operating activities prepared in
accordance with GAAP.
(2) Adjusted to reflect the Merger on September 29, 2009, through which
the Company issued 38.8 million shares of its common stock in
exchange for the 33.4 million Class B common units of ATN not
previously held by the Company. The Merger effectively removes the
non-controlling interests in the net income of Atlas Energy
Resources, LLC upon the completion of the transaction.
(3) Consists of the historical basic and diluted weighted average shares
of the Company for the respective period, adjusted for the 38.8
million shares of the Company's common stock issued in connection
with the Merger (see Note 2).
ATLAS ENERGY, INC.
CONSOLIDATING STATEMENTS OF OPERATIONS
(unaudited; in thousands, except per share data)
Three Months Ended September 30,
2009
Atlas Pipeline
and Atlas
Atlas Pipeline
Energy Holdings Eliminations Consolidated
Revenue:
Well construction and completion $ 81,496 $ a^' $ a^' $ 81,496
Gas and oil production 65,986 a^' a^' 65,986
Transmission, gathering and processing 6,098 199,505 a^' 205,603
Administration and oversight 3,149 a^' a^' 3,149
Well services 5,012 a^' a^' 5,012
Gain (loss) on asset sales (1,444 ) 1,499 a^' 55
Gain on mark-to-market derivatives a^' 1,032 a^' 1,032
Other income, net 424 4,427 a^' 4,851
Total revenue 160,721 206,463 a^' 367,184
Costs and expenses:
Well construction and completion 69,138 a^' a^' 69,138
Gas and oil production 12,128 a^' a^' 12,128
Transmission, gathering and processing 7,972 159,890 a^' 167,862
Well services 2,378 a^' a^' 2,378
General and administrative 22,532 9,534 a^' 32,066
Depreciation, depletion and amortization 24,563 21,897 a^' 46,460
Total costs and expenses 138,711 191,321 a^' 330,032
Operating income 22,010 15,142 a^' 37,152
Interest expense (18,475 ) (29,279 ) a^' (47,754 )
Income (loss) from continuing operations before income 3,535 (14,137 ) a^' (10,602 )
tax provision (benefit)
Provision (benefit) for income taxes (716 ) a^' a^' (716 )
Net income (loss) from continuing operations 4,251 (14,137 ) a^' (9,886 )
Discontinued operations a^' a^' a^' a^'
Net income (loss) 4,251 (14,137 ) a^' (9,886 )
Income attributable to non-controlling (2,351 ) a^' a^' (2,351 )
interests - E&P Operations
(Income) loss attributable to non-controlling a^' (953 ) 12,476 11,523
interests - Atlas Pipeline and Atlas Pipeline
Holdings
Net income (loss) attributable to common $ 1,900 $ (15,090 ) $ 12,476 $ (714 )
shareholders
ATLAS ENERGY, INC.
CONSOLIDATING STATEMENTS OF OPERATIONS
(unaudited; in thousands, except per share data)
Three Months Ended September 30,
2008
Atlas Pipeline
and Atlas
Atlas Pipeline
Energy Holdings Eliminations Consolidated
Revenue:
Well construction and completion $ 116,987 $ a^' $ a^' $ 116,987
Gas and oil production 81,235 a^' a^' 81,235
Transmission, gathering and processing 4,886 418,077 (12,021 ) 410,942
Administration and oversight 5,216 a^' a^' 5,216
Well services 5,299 a^' a^' 5,299
Gain on mark-to-market derivatives a^' 147,505 a^' 147,505
Other income, net 737 3,081 a^' 3,818
Total revenue 214,360 568,663 (12,021 ) 771,002
Costs and expenses:
Well construction and completion 101,727 a^' a^' 101,727
Gas and oil production 16,315 a^' (3,627 ) 12,688
Transmission, gathering and processing 8,531 333,851 (8,394 ) 333,988
Well services 2,753 a^' a^' 2,753
General and administrative 14,435 (1,788 ) a^' 12,647
Depreciation, depletion and amortization 23,584 20,741 a^' 44,325
Total costs and expenses 167,345 352,804 (12,021 ) 508,128
Operating income 47,015 215,859 a^' 262,874
Interest expense (14,769 ) (22,562 ) a^' (37,331 )
Income from continuing operations before income 32,246 193,297 a^' 225,543
tax provision
Provision for income taxes 13,647 a^' a^' 13,647
Net income from continuing operations 18,599 193,297 a^' 211,896
Discontinued operations a^' 6,261 a^' 6,261
Net income 18,599 199,558 a^' 218,157
Income attributable to non-controlling (20,361 ) a^' a^' (20,361 )
interests - E&P Operations
Income attributable to non-controlling a^' (2,591 ) (171,102 ) (173,693 )
interests - Atlas Pipeline and Atlas Pipeline
Holdings
Net income (loss) attributable to common $ (1,762 ) $ 196,967 $ (171,102 ) $ 24,103
shareholders
ATLAS ENERGY, INC.
CONSOLIDATING STATEMENTS OF OPERATIONS
(unaudited; in thousands, except per share data)
Nine Months Ended September 30,
2009
Atlas Pipeline
and Atlas
Atlas Pipeline
Energy Holdings Eliminations Consolidated
Revenue:
Well construction and completion $ 257,231 $ a^' $ a^' $ 257,231
Gas and oil production 207,908 a^' a^' 207,908
Transmission, gathering and processing 16,210 555,929 (16,766 ) 555,373
Administration and oversight 9,644 a^' a^' 9,644
Well services 14,911 a^' a^' 14,911
Gain (loss) on asset sales (5,694 ) 111,440 a^' 105,746
Loss on mark-to-market derivatives a^' (17,245 ) a^' (17,245 )
Other income (loss), net (995 ) 12,691 a^' 11,696
Total revenue 499,215 662,815 (16,766 ) 1,145,264
Costs and expenses:
Well construction and completion 218,236 a^' a^' 218,236
Gas and oil production 39,421 a^' (6,204 ) 33,217
Transmission, gathering and processing 22,930 458,384 (10,562 ) 470,752
Well services 6,922 a^' a^' 6,922
General and administrative 54,631 26,988 a^' 81,619
Depreciation, depletion and amortization 79,863 67,564 a^' 147,427
Total costs and expenses 422,003 552,936 (16,766 ) 958,173
Operating income 77,212 109,879 a^' 187,091
Interest expense (46,526 ) (77,796 ) a^' (124,322 )
Income from continuing operations before income 30,686 32,083 a^' 62,769
tax provision
Provision for income taxes 5,555 a^' a^' 5,555
Net income from continuing operations 25,131 32,083 a^' 57,214
Discontinued operations a^' 59,769 a^' 59,769
Net income 25,131 91,852 a^' 116,983
Income attributable to non-controlling (18,067 ) a^' a^' (18,067 )
interests - E&P Operations
Income attributable to non-controlling a^' (2,075 ) (83,544 ) (85,619 )
interests - Atlas Pipeline and Atlas Pipeline
Holdings
Net income (loss) attributable to common $ 7,064 $ 89,777 $ (83,544 ) $ 13,297
shareholders
ATLAS ENERGY, INC.
CONSOLIDATING STATEMENTS OF OPERATIONS
(unaudited; in thousands, except per share data)
Nine Months Ended September 30,
2008
Atlas Pipeline
and Atlas
Atlas Pipeline
Energy Holdings Eliminations Consolidated
Revenue:
Well construction and completion $ 343,466 $ a^' $ a^' $ 343,466
Gas and oil production 236,417 a^' a^' 236,417
Transmission, gathering and processing 15,151 1,235,976 (32,768 ) 1,218,359
Administration and oversight 15,370 a^' a^' 15,370
Well services 15,363 a^' a^' 15,363
Gain on asset sales a^' a^' a^' a^'
Loss on mark-to-market derivatives a^' (257,344 ) a^' (257,344 )
Other income, net 1,622 10,220 a^' 11,842
Total revenue 627,389 988,852 (32,768 ) 1,583,473
Costs and expenses:
Well construction and completion For full details on Atlas Energy Inc (ATLS) click here. Atlas Energy Inc (ATLS) has Short Term PowerRatings of 3. Details on Atlas Energy Inc (ATLS) Short Term PowerRatings is available at This Link.
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