Atlas Pipeline Partners L.P. (APL) filed Quarterly Report for the period ended 2009-09-30.
Atlas Pipeline Partners L.P. and its subsidiaries engage in the transmission gathering and processing of natural gas in the Mid-Continent United States and the Appalachian Basin. The predominant source of gas that APL gathers in the Appalachian Basin is from wells operated by Atlas Energy Resources LLC. APL continues to expand its gathering systems to provide capacity for Atlas Energy's drilling activities. The company is based in Moon Township Pennsylvania. Atlas Pipeline Partners L.p. has a market cap of $331.2 million; its shares were traded at around $6.93 with a P/E ratio of 4.3 and P/S ratio of 0.2.
Highlight of Business Operations:
Other income (loss), net, including the impact of certain gains and losses recognized on derivatives, was a gain of $4.1 million for the three months ended September 30, 2009, which represents an unfavorable movement of $149.8 million from $153.9 million of income for the prior year comparable period. This unfavorable movement was due primarily to a $223.0 million unfavorable movement in non-cash mark-to-market adjustments on derivatives and a $5.2 million unfavorable movement related to cash settlements on non-qualified derivatives, partially offset by the absence in the current year period of $70.3 million of net cash derivative expense related to the early termination of a portion of our derivative contracts (see Note 12 to the consolidated financial statements in Item 1, “Financial Statements”) and a favorable movement of $9.0 million for non-cash derivative gains related to the early termination of a portion of our derivative contracts. The $223.0 million unfavorable movement in non-cash mark-to-market adjustments on derivatives was due principally to the recognition of a $235.0 million gain during the three months ended September 30, 2008, which was due to a decrease in forward crude oil market prices from June 30, 2008 to September 30, 2008 and their favorable mark-to-market impact on certain non-qualified derivative contracts we had for production volumes in future periods. Average forward crude oil prices, which were the basis for adjusting the fair value of our crude oil derivative contracts, at September 30, 2008 were $102.64 per barrel, a decrease of $37.48 per barrel from average forward crude oil market prices at June 30, 2008 of $140.12 per barrel. We enter into derivative instruments to hedge our forecasted natural gas, NGLs and condensate sales against the variability in expected future cash flows attributable to changes in market prices. See further discussion of derivatives under Item 3, “Quantitative and Qualitative Discussion About Market Risk”.
Costs and Expenses. Natural gas and liquids cost of goods sold of $145.0 million for the three months ended September 30, 2009 represented a decrease of $169.3 million from the prior year comparable period due primarily to a decrease in average commodity prices in comparison to the prior year comparable period. Plant operating expenses of $14.8 million for the three months ended September 30, 2009 represented a decrease of $1.2 million from the prior year comparable period due primarily to a $1.5 million decrease associated with the Chaney Dell system resulting from lower operating and maintenance costs. Transportation and compression expenses decreased to $0.1 million for the three months ended September 30, 2009 compared with $2.9 million for the prior year comparable period due to our contribution of the Appalachia system to Laurel Mountain.
Costs and Expenses. Natural gas and liquids cost of goods sold of $409.4 million for the nine months ended September 30, 2009 represented a decrease of $528.5 million from the prior year comparable period due primarily to a decrease in average commodity prices in comparison to the prior year period. Plant operating expenses of $42.7 million for the nine months ended September 30, 2009 represented a decrease of $3.7 million from the prior year comparable period due primarily to a $1.9 million decrease associated with the Chaney Dell system and a $1.1 million decrease associated with the Midkiff/Benedum system resulting from lower operating and maintenance costs. Transportation and compression expenses decreased to $6.3 million for the nine months ended September 30, 2009 compared with $7.8 million for the prior year comparable period due to our contribution of the Appalachia system to Laurel Mountain.
Interest expense increased to $75.8 million for the nine months ended September 30, 2009 as compared with $62.7 million for the comparable prior year period. This $13.1 million increase was primarily due to a $8.9 million increase in interest expense related to our additional senior notes issued during June 2008 (see “—Senior Notes”), a $6.2 million increase in interest expense associated with outstanding borrowings on our revolving credit facility, and a $2.8 million increase in the amortization of deferred finance costs due principally to accelerated amortization associated with the retirement of a portion of our term loan with the proceeds from the sale of our NOARK system, partially offset by a $6.4 million decrease in interest expense associated with our senior secured term loan primarily due to the repayment of $370.1 million of indebtedness since September 2008 (see “—Term Loan and Revolving Credit Facility”) and lower unhedged interest rates.
Net cash provided by operating activities of $51.5 million for the nine months ended September 30, 2009 represented an increase of $115.0 million from $63.5 million of net cash used in operating activities for the prior year comparable period. The increase was derived from a $175.4 million favorable movement in net earnings from continuing operations excluding non-cash charges, partially offset by a $39.9 million decrease in cash flows from working capital changes and a $20.5 million unfavorable movement in cash provided by discontinued operations. The increase in net earnings from continuing operations excluding non-cash charges was principally due to the absence in the current year period of $186.1 million of net cash derivative expense related to early termination of a portion of our derivative contracts (see Note 12 to the consolidated financial statements in Item 1, “Financial Statements”). Non-cash charges which impacted net earnings excluding non-cash charges include an $81.0 million increase in non-cash derivative losses, a $108.9 million decrease resulting from the gain on the sale of our Appalachia system assets to subsidiaries of The Williams Companies, Inc. to form the Laurel Mountain joint venture and a $2.5 million decrease resulting from the gain on the sale of a natural gas processing facility, partially offset by a $6.4 million increase in depreciation and amortization expense and a $14.8 million increase in non-cash compensation expense. The movement in non-cash derivative losses resulted from decreases in commodity prices during the respective periods presented and their unfavorable impact on the fair value of derivative contracts we have for future periods. The increase in depreciation and amortization principally resulted from depreciation associated with our expansion capital expenditures incurred subsequent to September 30, 2008. The increase in non-cash compensation was principally attributable to a $16.1 million net mark-to-market gain recognized during the prior year comparable period principally associated with the vesting of certain common unit awards that were based on the financial performance of certain assets during 2008. The mark-to-market gain was the result of a significant change in our common unit market price at September 30, 2008 when compared with the December 31, 2007 price, which was utilized in the estimate of the non-cash compensation expense for these awards.
Net cash provided by investing activities was $258.8 million for the nine months ended September 30, 2009, an increase of $472.7 million from $213.9 million of net cash used in investing activities for the prior year comparable period. This increase was principally due to a $313.2 million increase in cash provided by discontinued operations, the net proceeds of $110.4 million received from the sale of our Appalachian system assets and a natural gas processing facility and an $86.2 million decrease in capital expenditures, partially offset by a prior year receipt of a $30.2 million cash reimbursement for state sales tax paid on our prior year transaction to acquire the Chaney Dell and Midkiff/Benedum systems and a prior year period receipt of $1.3 million in connection with a post-closing purchase price adjustment of our 2007 acquisition of the Chaney Dell and Midkiff/Benedum. See further discussion of capital expenditures under “—Capital Requirements”.
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