Atlas Energy, L.P. (ATLS, Financial) last month, reported operating and financial results for the second quarter 2014. Edward E. Cohen, Chief Executive Officer of ATLS, stated, “We are pleased with this quarter’s results at ATLS, which are attributable to both of our subsidiaries, Atlas Pipeline and Atlas Resource. As the only general partner MLP with income from both midstream and upstream assets, we expect to benefit from further growth in cash flow, including incentive distribution rights, from our subsidiaries this year and beyond.”
Cash Distributions:
ATLS declared a cash distribution of $0.49 per limited partner unit for the second quarter 2014, which represents a $0.05 per unit, or an 11%, increase over the prior year second quarter. The second quarter 2014 ATLS distribution will be paid on August 19, 2014 to holders of record as of August 6, 2014.
Atlas Resource Partners, L.P. (NYSE: ARP), Atlas Energy’s E&P subsidiary, paid monthly cash distributions totaling $0.583 per limited partner unit for the second quarter 2014, an approximate 8% increase over the prior year second quarter distribution. The most recent ARP monthly distribution of $0.1966 per unit ($2.36 per unit on an annual basis) for June 2014 will be paid on August 14, 2014 to holders of record as of August 6, 2014. ATLS will receive approximately $18.3 million of cash distributions from ARP’s second quarter 2014 distribution. Atlas Pipeline Partners, L.P. (NYSE: APL), Atlas Energy’s midstream subsidiary, declared a cash distribution for the second quarter 2014 of $0.63 per unit, a 2% increase from APL’s prior year quarter. This distribution will be paid on August 14, 2014 to holders of record as of August 7, 2014. ATLS will receive approximately $10.7 million of cash distributions based upon APL’s second quarter 2014 distribution.
Recent Events In The Market:
Atlas Resource’s issuance of an additional $100 million 7.75% Senior Notes due 2021. On June 2, 2014, ARP closed its offering of an additional $100 million of its 7.75% Senior Notes due 2021 in a private placement transaction issued at 99.5% of par. ARP used the net proceeds from this offering to fund a portion of its previously announced acquisition of oil assets in the Rangely Field in northwest Colorado. 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.
APL’s Second Quarter 2014 Highlights:
During the second quarter 2014, APL’s processed volumes on its gathering and processing systems in the Mid Continent region, primarily in Texas and Oklahoma, were over 1.5 billion cubic feet per day (“Bcfd”), approximately 20% higher than the prior year comparable quarter’s volumes. APL processed 123,000 bpd of natural gas liquids generated from its five processing systems in highly prolific oil & gas basins.
ATLS owns a 2.0% general partner interest, all of the incentive distribution rights, and a 5.8% limited partner interest in APL. ATLS’ financial results are presented on a consolidated basis with those of APL. Non-controlling interests in APL are reflected as income (expense) in ATLS’ consolidated statements of operations and as a component of partners’ capital on its consolidated balance sheets. A consolidating statement of operations and balance sheet have also been provided in the financial tables to this release for the comparable periods presented. Please refer to the APL first quarter 2014 earnings release for additional details on its financial results.
Hedge Positions In Market:
In connection with its acquisition from EP Energy in July 2013 of natural gas proved reserves in the Arkoma Basin (“Arkoma Assets”), ATLS entered into direct natural gas hedge positions for a substantial portion of its production through 2018. A summary of ATLS’s derivative positions as of August 7, 2014 is provided in the financial tables of this release.
Corporate Expenses:
Cash general and administrative expense, excluding amounts attributable to APL and ARP, was $2.3 million for the second quarter 2014, a decrease of $1.6 million from the first quarter 2014 and $0.3 million higher than the prior year comparable quarter. The sequential decrease in expense was due primarily to the seasonality of certain public company costs, which are weighted more heavily to the early portion of the year. Please refer to the consolidating statements of operations provided in the financial tables of this release.
Cash interest expense, excluding amounts attributable to APL and ARP, was $4.0 million for the second quarter 2014, consistent with the first quarter 2014 and $2.6 million higher than the prior year comparable quarter. The increase from the prior year was due primarily to interest expense on ATLS’ $240 million term loan credit facility, which was entered into in July 2013 to fund the acquisition of the Arkoma Assets from EP Energy and the purchase of the Class C convertible preferred units from ARP. As of June 30, 2014, ATLS had approximately $238 million of total debt, with no borrowings outstanding under its $50 million revolving credit facility, and a cash position of approximately $13 million.
