Atlas America Inc. Reports Operating Results (10-Q)
Atlas America Inc. has a market cap of $2.49 billion; its shares were traded at around $31.84 with a P/E ratio of 46.2 and P/S ratio of 1.5. Atlas America Inc. had an annual average earning growth of 74.9% over the past 5 years.ATLS is in the portfolios of Ron Baron of Baron Funds, Bruce Kovner of Caxton Associates, Jean-Marie Eveillard of First Eagle Investment Management, LLC, Ruane Cunniff of Ruane & Cunniff & Goldfarb Inc, Steven Cohen of SAC Capital Advisors, George Soros of Soros Fund Management LLC, Jeremy Grantham of GMO LLC.
Highlight of Business Operations: Marcellus Shale Joint Venture. Effective April 20, 2010, we consummated an undivided joint venture with Reliance, whereby we sold a 40% undivided joint venture interest in approximately 300,000 net acres (approximately 120,000 net acres to Reliance) of undeveloped core Marcellus Shale leasehold acreage in exchange for $340.0 million of cash and $1,357.5 million in the form of a drilling carry. In addition to funding its own 40% interest of the drilling and completion costs, Reliance is required to fund the remaining 75% of our respective portion of drilling and completion costs until the $1,357.5 million drilling carry is fully utilized. Therefore, we are responsible for only a net 15% of the capital costs required to drill and complete each well included in the AMI for the duration of the drilling carry, which is calculated as 25% of our 60% interest in each well. We have five and a half years to utilize the drilling carry, subject to a two-year extension under certain conditions.
Acquisition of additional Marcellus Shale Acreage. In April 2010, we and Reliance agreed, through two separate transactions, to purchase an additional approximate 42,400 undeveloped core Marcellus Shale leasehold acres, which is contained within the joint ventures AMI, for an average purchase price of $4,532 per acre. One of the transactions was for approximately 17,000 leasehold acres, for which we agreed to pay a total purchase price of $85.9 million, of which $43.9 million was paid at closing, with the remaining $41.9 million to be paid following the completion of verification of the sellers legal title to the properties, but no later than October 21, 2010. Of the $43.9 million paid at closing of the transaction, we were reimbursed for $17.6 million by Reliance for its 40% ownership interest. In connection with this transaction, we recorded a $41.9 million liability for the second installment of the purchase price and a $16.8 million receivable from Reliance for its 40% portion of the amount on our consolidated balance sheet at June 30, 2010. The second transaction was for approximately 25,400 leasehold acres, for which we agreed to pay a total purchase price of $106.0 million at closing, which is expected to be on or prior to September 5, 2010. Pursuant to our joint venture agreement, Reliance is obligated for its 40% portion of the cost of these transactions.
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