05.05.2008 12:30:00
|
Atlas Pipeline Partners, L.P. Reports Record First Quarter 2008 Results
Atlas Pipeline Partners, L.P. (NYSE: APL) (the "Partnership”)
today reported record financial results for the first quarter 2008.
The results of the first quarter 2008 include:
Adjusted EBITDA (1) of $74.4 million
compared with $19.8 million for the prior year first quarter, an
increase of $54.6 million, or over 275%. The quarter-over-quarter
results were favorably impacted by contributions from the Chaney Dell
and Midkiff/Benedum systems, which the Partnership acquired in July
2007, and higher volumes on all of its other systems. A reconciliation
of non-GAAP measures, including adjusted EBITDA, distributable cash
flow, and adjusted net income, is provided within the financial tables
of this release;
Distributable cash flow, a non-GAAP measure, of $53.0 million, an
increase of $40.2 million or over 300%, compared to the prior year
first quarter. The Partnership declared a record quarterly cash
distribution for the first quarter 2008 of $0.94 per common limited
partner unit. This distribution represented an increase of $0.08 per
unit, or 9.3%, compared to the prior year first quarter. The
Partnership’s distribution coverage ratio
for the first quarter 2008 was 1.2x;
Adjusted net income, a non-GAAP measure, of $28.2 million for the
first quarter 2008, an increase of $21.7 million, or over 330%,
compared to the prior year first quarter. However, because of $76.9
million of non-cash derivative losses recognized in the current
quarter, on a GAAP basis the Partnership recognized a net loss of
$45.8 million for the first quarter 2008 compared with net income of
$2.5 million for the prior year first quarter;
System-wide volumes of over 1.2 billion cubic feet per day ("bcfd”)
for the first quarter 2008 compared to volumes of approximately 0.7
bcfd for the prior year quarter, an increase of approximately 76%.
Mid-Continent Segment Results
Mid-Continent segment total revenue increased $257.8 million, or
approximately 230%, to $369.8 million for the first quarter 2008,
excluding the effect of non-cash derivative expenses. This increase
principally reflects a $219.9 million contribution from the
acquisition of the Chaney Dell and Midkiff/Benedum systems and higher
volumes and commodity prices on its other systems.
The NOARK system’s throughput volume
increased 103.4 million cubic feet per day ("MMcfd”),
or 36%, to 390.3 MMcfd for the first quarter 2008.
The Elk City/Sweetwater system’s average
natural gas processed volume increased 29.1 MMcfd, or approximately
14%, to 236.4 MMcfd for the first quarter 2008. The Partnership
connected 21 new wells to the Elk City/Sweetwater system during the
first quarter 2008.
The Velma system’s average processed
natural gas volume increased 1.4 MMcfd, or approximately 2%, to 59.9
MMcfd for the first quarter 2008. The Partnership connected 7 new
wells to its Velma system during the first quarter 2008.
The Chaney Dell system’s average processed
natural gas volume was 247.9 MMcfd for the first quarter 2008. The
Partnership connected 109 new wells to its Chaney Dell system during
the first quarter 2008.
The Midkiff/Benedum system’s average
processed natural gas volume was 136.7 MMcfd for the first quarter
2008. The Partnership connected 43 new wells to its Midkiff/Benedum
system during the first quarter 2008.
Appalachia Segment Results
Total revenue for the Appalachia segment increased $2.7 million, or
approximately 34%, to $10.5 million for the first quarter 2008, due
principally to higher throughput volume, higher natural gas prices and
$1.0 million of natural gas and liquids sales associated with the
Irishtown processing plant, which was acquired in August 2007.
Throughput volume increased 13.1 MMcfd, or 21%, to 75.6 MMcfd for the
first quarter 2008 resulting from the connection of new wells to the
Appalachia gathering system, primarily through its relationship with
Atlas Energy Resources, LLC (NYSE: ATN) ("Atlas
Energy”), and throughput associated with
the gathering system acquired in connection with the Irishtown
processing plant.
During the first quarter 2008, 204 new wells were connected to the
Appalachia gathering system compared with 121 new wells for the prior
year first quarter.
On February 22, 2008, the Partnership purchased a gas gathering system
and related facilities located in northeastern Tennessee for $9.1
million. The system serves several counties northwest of Knoxville, an
area of active drilling and production including that of Atlas Energy.
In conjunction with the acquisition of the gathering system, the
Partnership has also announced that it intends to construct a new 20
Mmcf per day cryogenic processing facility that will service natural
gas produced in this northeastern Tennessee area.
Corporate and Other
General and administrative expense, including amounts reimbursed to
affiliates, decreased $0.8 million to $5.5 million for the first
quarter 2008 compared with $6.3 million for the prior year first
quarter. This decrease was primarily related to a $4.6 million
decrease in non-cash compensation expense, partially offset by higher
costs of managing the Partnership’s
operations, including the Chaney Dell and Midkiff/Benedum systems
acquired in July 2007. The decrease in non-cash compensation expense
was principally attributable to a mark-to-market gain recognized
during the first quarter for certain common unit awards for which the
ultimate amount to be issued will be determined after the completion
of the Partnership’s 2008 fiscal year. The
mark-to-market gain was the result of a decrease in the Partnership’s
common unit market price at March 31, 2008 when compared with the
December 31, 2007 price, which is utilized in the estimate of the
non-cash compensation expense for these awards.
Depreciation and amortization increased $19.3 million to $25.8 million
for the first quarter 2008 due primarily to the depreciation
associated with the Chaney Dell and Midkiff/Benedum assets acquired by
the Partnership in July 2007, the Partnership’s
expansion capital expenditures incurred subsequent to the first
quarter 2007, and a $4.0 million write-off of costs related to a
pipeline expansion project. The costs incurred consisted of a vendor
deposit for the manufacture of pipeline which expired in accordance
with a contractual arrangement.
Interest expense increased $13.6 million to $20.4 million for first
quarter 2008 compared with the prior year first quarter primarily
related to interest associated with the Partnership’s
$830.0 million term loan, and secondarily, from additional borrowings
under the Partnership’s $300.0 million
revolving credit facility. The increased borrowings were partially
offset by lower interest rates.
During the first quarter 2008, the Partnership executed interest rate
swap contracts for a notional principal amount of $200.0 million. These
contracts convert $200.0 million of the Partnership’s
LIBOR-based floating rate exposure to a fixed LIBOR rate of 2.88%, plus
the applicable margin as defined under the terms of its credit facility.
The contracts became effective beginning in the first quarter 2008 and
expire in the first quarter 2010. During April 2008, the Partnership
entered into additional interest rate swap contracts having an aggregate
notional principal amount of $250.0 million. These contracts convert an
additional $250.0 million of the Partnership’s
LIBOR-based floating rate exposure to a fixed LIBOR rate of 3.14%, plus
the applicable margin as defined under the terms of its credit facility.
The contracts became effective beginning in the second quarter 2008 and
expire in the second quarter 2010.
At March 31, 2008, the Partnership had $1.3 billion of total debt,
including its $830.0 million term loan that matures in 2014, $294.4
million of senior unsecured notes that mature in 2015 and $165.0 million
of outstanding borrowings under its revolving credit facility that
matures in 2013.
(1) Adjusted EBITDA represents adjusted
earnings before interest, income taxes, depreciation and
amortization ("Adjusted EBITDA"), a non-GAAP (generally accepted
accounting principles) measure
Interested parties are invited to access the live webcast of an investor
call with management regarding the Partnership’s
first quarter 2008 results on Monday, May 5, 2008 at 2:00 pm ET by going
to the Investor Relations section of the Partnership’s
website at www.atlaspipelinepartners.com.
An audio replay of the conference call will also be available beginning
at 4:00 pm ET on Monday, May 5, 2008. To access the replay, dial
1-888-286-8010 and enter conference code 63969074.
Atlas Pipeline Partners, L.P. is active in the transmission,
gathering and processing segments of the midstream natural gas industry.
In the Mid-Continent region of Oklahoma, Arkansas, northern and western
Texas and the Texas panhandle, the Partnership owns and operates eight
gas processing plants and a treating facility, as well as approximately
7,900 miles of active intrastate gas gathering pipeline and a 565-mile
interstate natural gas pipeline. In Appalachia, it owns and operates
approximately 1,600 miles of natural gas gathering pipelines in western
Pennsylvania, western New York, eastern Ohio and northeastern Tennessee.
For more information, visit our website at www.atlaspipelinepartners.com
or contact bbegley@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 5.5 million common units of Atlas
Pipeline Partners.
Atlas Energy Resources, LLC develops and produces domestic
natural gas and to a lesser extent, oil. Atlas Energy is one of the
largest independent energy producers in the Appalachian Basin and
northern Michigan. The Company sponsors and manages tax-advantaged
investment partnerships, in which it co-invests, to finance the
exploration and development of the Company’s
acreage in the Appalachian Basin. Atlas Energy is active principally in
Pennsylvania, Michigan and Tennessee. For more information, visit Atlas
Energy’s website at www.atlasenergyresources.com
or contact investor relations at bbegley@atlasamerica.com.
Atlas America, Inc. (NASDAQ: ATLS) owns an approximate 64%
limited partner interest in Atlas Pipeline Holdings, L.P. and an
approximate 48% common unit interest and all of the Class A and
management incentive interests in Atlas Energy Resources, LLC. For more
information, please visit our website at www.atlasamerica.com,
or contact Investor Relations at bbegley@atlasamerica.com.
Certain matters discussed within this press release are
forward-looking statements. Although Atlas Pipeline
Partners, L.P. believes the expectations reflected in such
forward-looking statements are based on reasonable assumptions, it can
give no assurance that its expectations will be attained. Factors
that could cause actual results to differ materially from expectations
include financial performance, inability of the Partnership to
successfully integrate the operations at the acquired systems,
regulatory changes, changes in local or national economic conditions and
other risks detailed from time to time in Atlas Pipeline’s
reports filed with the SEC, including quarterly reports on Form 10-Q,
reports on Form 8-K and annual reports on Form 10-K. ATLAS PIPELINE PARTNERS, L.P. AND SUBSIDIARIES Financial Summary (in thousands, except per unit amounts)
Three Months Ended March 31, STATEMENTS OF OPERATIONS
2008
2007
Revenue:
Natural gas and liquids
$
366,119
$
102,176
Transportation, compression, and other fees –
affiliates
9,159
7,720
Transportation, compression, and other fees –
third parties
14,862
9,838
Other loss, net
(86,754
)
(2,197
)
Total revenue and other loss, net
303,386
117,537
Costs and expenses:
Natural gas and liquids
276,664
87,810
Plant operating
14,935
4,530
Transportation and compression
3,812
3,112
General and administrative
4,370
5,703
Compensation reimbursement – affiliates
1,129
630
Depreciation and amortization
25,825
6,534
Interest
20,381
6,759
Minority interest
2,090
-
Total costs and expenses
349,206
115,078
Net income (loss)
(45,820
)
2,459
Preferred unit dividend effect
(137
)
-
Preferred unit imputed dividend cost
(505
)
(499
)
Net income (loss) attributable to common limited partners and the
general partner
$
(46,462
)
$
1,960
Allocation of net income (loss) attributable to common limited
partners and the general partner:
Common limited partners’ interest
$
(52,387
)
$
(1,884
)
General partner’s interest
5,925
3,844
Net income (loss) attributable to common limited partners and the
general partner
$
(46,462
)
$
1,960
Net income (loss) attributable to common limited partners per
unit:
Basic
$
(1.35
)
$
(0.14
)
Diluted
$
(1.35
)
$
(0.14
)
Weighted average common limited partner units outstanding:
Basic
38,763
13,080
Diluted
38,763
13,080
Capital expenditure data:
Maintenance capital expenditures
$
1,619
$
772
Expansion capital expenditures
82,450
15,857
Total
$
84,069
$
16,629
March 31,
December 31, Balance Sheet Data (at period end):
2008 2007
Cash and cash equivalents
$
2,555
$
11,980
Total assets
2,942,899
2,877,614
Total debt
1,289,391
1,229,426
Total partners’ capital
1,220,331
1,273,960
ATLAS PIPELINE PARTNERS, L.P. AND SUBSIDIARIES Segment Information (in thousands)
Three Months Ended March 31,
2008
2007
Mid-Continent Revenue:
Natural gas and liquids
$
365,159
$
102,176
Transportation, compression, and other fees
14,615
9,819
Other loss, net
(86,865
)
(2,279
)
Total revenue and other loss, net
292,909
109,716
Costs and expenses:
Natural gas and liquids
276,182
87,810
Plant operating
14,935
4,530
Transportation and compression
1,498
1,720
General and administrative
2,530
3,894
Depreciation and amortization
24,443
5,460
Minority interest
2,090
-
Total costs and expenses
321,678
103,414
Segment profit (loss)
$
(28,769
)
$
6,302
Appalachia Revenue:
Natural gas and liquids
$
960
$
-
Transportation, compression, and other fees –
affiliates
9,159
7,720
Transportation, compression, and other fees –
third parties
247
19
Other income
111
82
Total revenue and other income
10,477
7,821
Costs and expenses:
Natural gas and liquids
482
-
Transportation and compression
2,314
1,392
General and administrative
1,484
1,220
Depreciation and amortization
1,382
1,074
Total costs and expenses
5,662
3,686
Segment profit
$
4,815
$
4,135
Reconciliation of segment profit (loss) to net income
(loss): Segment profit (loss):
Mid-Continent
$
(28,769
)
$
6,302
Appalachia
4,815
4,135
Total segment profit (loss)
(23,954
)
10,437
Corporate general and administrative expense
(1,485
)
(1,219
)
Interest expense
(20,381
)
(6,759
)
Net income (loss)
$
(45,820
)
$
2,459
ATLAS PIPELINE PARTNERS, L.P. AND SUBSIDIARIES (in thousands)
Three Months Ended March 31, 2008
2007 Reconciliation of net income (loss) to adjusted net income(1):
Net income (loss)
$
(45,820
)
$
2,459
Non-cash derivative expense
76,856
2,277
Non-cash compensation expense (income)
(2,795
)
1,795
Adjusted net income
$
28,241
$
6,531
Preferred unit dividend effect
(137
)
-
Preferred unit imputed dividend cost
(505
)
(499
)
Adjusted net income attributable to common limited partners and
the general partner
$
27,599
$
6,032
Allocation of adjusted net income attributable to common
limited partners and the general partner:
Common limited partners’ interest
$
20,185
$
2,025
General partner’s interest
7,414
4,007
Adjusted net income attributable to common limited partners and
the general partner
$
27,599
$
6,032
Adjusted net income attributable to common limited partners per
unit:
Basic
$
0.52
$
0.15
Diluted
$
0.51
$
0.15
Weighted average common limited partner units outstanding:
Basic
38,763
13,080
Diluted
39,742
13,325
Reconciliation of net income (loss) to other non-GAAP measures(1):
Net income (loss)
$
(45,820
)
$
2,459
Depreciation and amortization
25,825
6,534
Interest expense
20,381
6,759
EBITDA
386
15,752
Non-cash derivative expense
76,856
2,277
Non-cash compensation expense (income)
(2,795
)
1,795
Adjusted EBITDA
74,447
19,824
Interest expense
(20,381
)
(6,759
)
Amortization of deferred financing costs
679
534
Preferred unit dividend effect
(137
)
-
Maintenance capital expenditures
(1,619
)
(772
)
Distributable cash flow(2)
$
52,989
$
12,827
(1) Adjusted net income, EBITDA,
adjusted EBITDA and distributable cash flow are non-GAAP
(generally accepted accounting principles) financial measures
under the rules of the Securities and Exchange Commission.
Management of the Partnership believes that adjusted net income,
EBITDA, adjusted EBITDA and distributable cash flow provide
additional information for evaluating the Partnership's ability to
make distributions to its common unitholders and the general
partner, 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. EBITDA and adjusted EBITDA are also
financial measurements that, with certain negotiated adjustments,
are utilized within the Partnership's financial covenants under
its credit facility. Adjusted net income, EBITDA, adjusted EBITDA
and distributable 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.
(2) In connection with the acquisition
of control of the Chaney Dell and Midkiff/Benedum systems, the
Partnership's general partner, which holds all of the incentive
distribution rights in the Partnership, agreed to allocate up to
$5.0 million of its incentive distribution rights per quarter back
to the Partnership through the quarter ended June 30, 2009, and up
to $3.75 million per quarter thereafter. The general partner also
agreed that the resulting allocation of incentive distribution
rights back to the Partnership would be allocated after the
General Partner receives the initial $3.7 million per quarter of
incentive distribution rights through the quarter ended December
31, 2007, and $7.0 million per quarter thereafter.
ATLAS PIPELINE PARTNERS, L.P. AND SUBSIDIARES Operating Highlights
Three Months Ended March 31, 2008
2007 Mid-Continent –
Velma System Natural Gas
Gross natural gas gathered – mcfd(1)
62,400
61,017
Gross natural gas processed – mcfd(1)
59,867
58,508
Gross residue natural gas – mcfd(1)
47,138
45,689
Natural Gas Liquids
Gross NGL sales – bpd(1)
6,688
6,247
Condensate
Gross condensate sales – bpd(1)
254
200
Mid-Continent –
Elk City/Sweetwater System Natural Gas
Gross natural gas gathered – mcfd(1)
305,377
287,892
Gross natural gas processed – mcfd(1)
236,403
207,253
Gross residue natural gas – mcfd(1)
213,130
190,940
Natural Gas Liquids
Gross NGL sales – bpd(1)
10,677
8,515
Condensate
Gross condensate sales – bpd(1)
363
322
Mid-Continent –
Chaney Dell System Natural Gas
Gross natural gas gathered – mcfd(1)
251,487
-
Gross natural gas processed – mcfd(1)
247,861
-
Gross residue natural gas – mcfd(1)
220,194
- Natural Gas Liquids
Gross NGL sales – bpd(1)
12,401
- Condensate
Gross condensate sales – bpd(1)
707
-
Mid-Continent –
Midkiff/Benedum System Natural Gas
Gross natural gas gathered – mcfd(1)
142,542
-
Gross natural gas processed – mcfd(1)
136,654
-
Gross residue natural gas – mcfd(1)
96,612
- Natural Gas Liquids
Gross NGL sales – bpd(1)
20,349
- Condensate
Gross condensate sales – bpd(1)
720
-
Mid-Continent –
NOARK system
Ozark Gas Transmission throughput –
mcfd(1)
390,293
286,891
Appalachia
Throughput – mcfd(1)
75,632
62,532
(1) "Mcf" represents thousand cubic
feet; "Mcfd" represents thousand cubic feet per day; "Bpd"
represents barrels per day.
ATLAS PIPELINE PARTNERS, L.P. AND SUBSIDIARIES Current Mid-Continent Segment Hedge Positions (as of May 5, 2008) Natural Gas Liquids Sales – Fixed
Price Swaps
Production Period
Average
Ended December 31, Volumes Fixed Price
(gallons)
(per gallon)
2008
23,940,000
$
0.697
2009
8,568,000
0.746
Crude Oil Sales Options (associated with NGL volume)
Production Period
Associated
Average
Ended
Crude
NGL
Crude
December 31, Volume
(barrels)
Volume (gallons) Strike Price (per barrel) Option Type
2008
3,517,200
240,141,888
$ 60.00
Puts purchased
2008
3,517,200
240,141,888
79.08
Calls sold
2009
5,184,000
354,533,760
60.00
Puts purchased
2009
5,184,000
354,533,760
78.88
Calls sold
2010
3,127,500
213,088,050
61.08
Puts purchased
2010
3,127,500
213,088,050
81.09
Calls sold
2011
606,000
34,869,240
70.59
Puts purchased
2011
606,000
34,869,240
95.56
Calls sold
2012
450,000
25,893,000
70.80
Puts purchased
2012
450,000
25,893,000
97.10
Calls sold
Natural Gas Sales – Fixed Price
Swaps
Production Period
Average
Ended December 31, Volumes Fixed Price
(mmbtu)(1)
(per mmbtu) (1)
2008
4,113,000
$ 8.804
2009
5,724,000
8.611
2010
4,560,000
8.526
2011
2,160,000
8.270
2012
1,560,000
8.250
Natural Gas Basis Sales
Production Period
Average
Ended December 31, Volumes Fixed Price
(mmbtu)(1)
(per mmbtu)(1)
2008
4,113,000
$ (0.732)
2009
5,724,000
(0.558)
2010
4,560,000
(0.622)
2011
2,160,000
(0.664)
2012
1,560,000
(0.601)
ATLAS PIPELINE PARTNERS, L.P. AND SUBSIDIARIES Current Mid-Continent Segment Hedge Positions (as of May 5, 2008) Natural Gas Purchases – Fixed Price
Swaps
Production Period
Average
Ended December 31, Volumes Fixed Price
(mmbtu)(1)
(per mmbtu)(1)
2008
12,195,000
$ 8.978(2)
2009
15,564,000
8.680
2010
8,940,000
8.580
2011
2,160,000
8.270
2012
1,560,000
8.250
Natural Gas Basis Purchases
Production Period
Average
Ended December 31, Volumes Fixed Price
(mmbtu)(1)
(per mmbtu)(1)
2008
12,195,000
$ (1.114)
2009
15,564,000
(0.654)
2010
8,940,000
(0.600)
2011
2,160,000
(0.700)
2012
1,560,000
(0.610)
Crude Oil Sales
Production Period
Average
Ended December 31, Volumes Fixed Price
(barrels)
(per barrel)
2008
45,300
$ 59.664
2009
33,000
62.700
Crude Oil Sales Options
Production Period
Average
Ended December 31, Volumes Strike Price
(barrels)
(per barrel)
Option Type
2008
204,900
$ 60.000
Puts purchased
2008
204,900
78.128
Calls sold
2009
306,000
60.000
Puts purchased
2009
306,000
80.017
Calls sold
2010
234,000
61.795
Puts purchased
2010
234,000
83.027
Calls sold
2011
30,000
60.000
Puts purchased
2011
30,000
74.500
Calls sold
2012
30,000
60.000
Puts purchased
2012
30,000
73.900
Calls sold
(1) Mmbtu represents million British
Thermal Units.
(2) Includes the Partnership's premium
received from its sale of an option for it to sell 936,000 mmbtu
of natural gas at an average price of $15.50 per mmbtu for the
year ended December 31, 2008.
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